01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 7th July 2025
GBP/EUR
Summary: GBP/EUR slipped to 1.1575 as the Pound remained under pressure from renewed UK fiscal concerns. The government’s welfare reform bill passed with significantly reduced cost-saving measures, prompting fears of future tax hikes or spending cuts. Meanwhile, the Euro found modest support from hawkish ECB rhetoric and a slight rebound in German industrial production, which rose 1.2% in May.
Outlook: Eurozone Retail Sales and ECB commentary will be key. If UK fiscal credibility continues to erode, GBP/EUR may remain on the defensive.
GBP/USD
Summary: GBP/USD retreated to 1.3600 as trade jitters resurfaced ahead of the 9th July US tariff deadline. President Trump confirmed that letters outlining tariff rates would be sent to 12 countries today, with implementation set for 1st August. The Pound was further weighed down by concerns over the rising cost of welfare spending and the potential for tax increases in the Autumn Budget.
Outlook: Market focus will remain on US trade developments and UK GDP data due Friday. If tariff tensions escalate, GBP/USD could face further downside.
EUR/USD
Summary: EUR/USD dipped to 1.1750 as risk sentiment soured and the Dollar gained modestly. Despite a surprise rise in German industrial output, the Euro struggled amid caution ahead of the US tariff deadline. ECB President Lagarde maintained a cautious tone, reaffirming the bank’s inflation target while acknowledging global uncertainty.
Outlook: Eurozone Sentix Investor Confidence and US Consumer Credit data will guide direction. If risk aversion deepens, EUR/USD may remain under pressure.
USD/AUD
Summary: AUD/USD fell sharply to near 0.6500, its lowest in nearly two weeks, as tariff concerns and weaker Chinese services data weighed on sentiment. Traders also positioned cautiously ahead of Tuesday’s RBA meeting, where a 25bp rate cut to 3.6% is widely expected.
Outlook: The RBA decision and accompanying statement will be pivotal. If the central bank signals further easing, AUD/USD could extend losses.
USD/CAD
Summary: USD/CAD climbed to 1.3650 as falling oil prices and risk-off sentiment supported the Dollar. Crude declined after OPEC+ announced a larger-than-expected production increase for August, pressuring the oil-sensitive Loonie.
Outlook: We will watch for US trade headlines and Wednesday’s FOMC Minutes. If risk aversion persists, USD/CAD may remain elevated.
USD/CHF
Summary: USD/CHF edged up to 0.7950 as markets awaited clarity on US tariff policy. The Franc remained supported by safe-haven demand, while speculation grew that the SNB could reintroduce negative rates if downside risks intensify.
Outlook: Swiss CPI and US trade developments will be key. If tariffs are confirmed and global trade tensions rise, USD/CHF could remain range-bound with a downside bias.
Final Summary
Currency markets opened the week on a cautious note as investors braced for US tariff announcements. The Pound weakened on UK fiscal concerns, while the Euro held steady on ECB policy support. The US Dollar gained modestly on safe-haven flows, pressuring risk-sensitive currencies like the Aussie and Loonie. The Swiss Franc remained firm amid geopolitical uncertainty.