01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 16th July 2025
GBP/EUR
Summary: GBP/EUR remains near 1.1500 despite hotter-than-expected UK inflation data. Headline CPI rose to 3.6% YoY in June, while core CPI climbed to 3.7%, both above forecasts. The Pound saw a modest rebound, but gains were capped by ongoing fiscal concerns and expectations of a BoE rate cut in August. Meanwhile, the Euro remains steady as EU officials continue trade negotiations with the US, though a €72 billion retaliatory tariff package is being prepared.
Outlook: If Eurozone growth risks intensify and UK inflation remains elevated, GBP/EUR could attempt a recovery. However, trade tensions and BoE dovish expectations may limit upside.
GBP/USD
Summary: GBP/USD rebounded to above 1.3400 after eight consecutive days of losses, supported by the UK’s hotter CPI print. The US Dollar softened slightly after Tuesday’s CPI data showed inflation rising to 2.7% YoY, with signs that tariffs are beginning to feed into consumer prices. Despite this, Fed officials remain cautious, and markets now see a lower probability of a September rate cut.
Outlook: Today’s US PPI and Fed Beige Book will be key. If inflation pressures persist and Fed rhetoric stays hawkish, GBP/USD may struggle to extend gains.
EUR/USD
Summary: EUR/USD recovered to around 1.1620 after dipping below 1.1600 for the first time in three weeks. The Euro remains under pressure from trade uncertainty, with the US threatening a 30% tariff on EU imports. However, hopes of a negotiated deal and stable Eurozone data have helped limit losses.
Outlook: Eurostat’s Trade Balance and US PPI will guide direction. If trade tensions escalate and US inflation remains sticky, EUR/USD could face renewed downside.
USD/AUD
Summary: AUD/USD holds above 0.6500 after Tuesday’s 0.5% decline. The Aussie is supported by improved consumer confidence and Trump’s openness to further trade talks. However, expectations of an August RBA rate cut and weaker Chinese retail sales continue to weigh.
Outlook: Thursday’s Australian labour market data will be pivotal. If employment surprises to the upside and risk sentiment improves, AUD/USD may attempt a rebound.
USD/CAD
Summary: USD/CAD trades near 1.3720, slightly lower after hotter Canadian CPI data reduced expectations of a BoC rate cut. Core CPI rose to 2.7% YoY, prompting a reassessment of July policy expectations. The US Dollar remains firm ahead of PPI and Fed commentary.
Outlook: If Canadian inflation remains elevated and US data disappoints, USD/CAD could drift lower. Oil price trends and tariff headlines will also influence direction.
USD/CHF
Summary: USD/CHF trades around 0.8020, extending its recovery for a third straight session. The Dollar is supported by cautious Fed commentary and stable inflation data, while the Swiss Franc remains firm on safe-haven demand amid geopolitical uncertainty.
Outlook: Swiss inflation data and US PPI will shape movement. If global tensions escalate and US inflation stays high, USD/CHF may remain range-bound with a downside bias.
Final Summary
Sterling rebounded modestly after hotter UK inflation data, but fiscal concerns and BoE rate cut expectations continue to weigh. The US Dollar softened slightly ahead of key producer inflation data, while the Euro steadied amid ongoing trade negotiations. Commodity-linked currencies like the Aussie and Loonie are mixed, with domestic data and global sentiment driving direction. The Swiss Franc remains supported by safe-haven flows. Focus now turns to US PPI, the Fed Beige Book, and upcoming labour market data for fresh momentum.