01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 5th August 2025
GBP/EUR
Summary: GBP/EUR ticked up to near 1.1500 as Sterling steadied ahead of Thursday’s BoE rate decision. Markets are pricing in a 25 bp cut to 4%, but analysts warn that the BoE faces a “tricky mix” of weak growth and elevated inflation. Meanwhile, the Euro softened slightly after the Sentix Confidence Index fell to -3.7 in August, its lowest in three months.
Outlook: If the BoE signals a cautious easing path and Eurozone sentiment remains weak, GBP/EUR may attempt further gains. Eurozone Producer Prices and UK Services PMI will be key.
GBP/USD
Summary: GBP/USD reclaimed the 1.3300 level, hitting a three-day high as Sterling extended Friday’s rebound. The Dollar remains broadly stable ahead of today’s ISM Services PMI, with traders now pricing in a 92% chance of a Fed rate cut in September following last week’s weak NFP data.
Outlook: If US services data disappoints and Fed rhetoric softens, GBP/USD could extend gains. UK New Car Sales and BoE commentary will also influence direction.
EUR/USD
Summary: EUR/USD receded slightly after failing to break above 1.1600, despite Friday’s 1.5% rally. The Euro remains supported by Fed rate cut expectations but capped by weak investor sentiment and unresolved trade tensions.
Outlook: Eurozone Services PMI and US trade data will guide movement. If Fed cut bets persist and Eurozone data stabilises, EUR/USD may hold above 1.1550.
USD/AUD
Summary: AUD/USD edged lower despite upbeat domestic PMI data and stronger Chinese Services PMI. The Aussie remains pressured by RBA rate cut expectations and cautious sentiment ahead of Household Spending figures.
Outlook: If Australian data disappoints and US Dollar holds firm, AUD/USD may struggle to reclaim 0.6500. RBA guidance and Chinese growth signals remain key.
USD/CAD
Summary: USD/CAD trades near 1.3790, steady ahead of US ISM Services PMI. The Loonie remains under pressure from subdued oil prices and lingering concerns over Fed independence following Governor Kugler’s resignation.
Outlook: If US data surprises to the upside and oil remains soft, USD/CAD could push higher. Canadian GDP and Fed commentary will be pivotal.
USD/CHF
Summary: USD/CHF rose to 0.8078, snapping a two-day losing streak as the Swiss Franc weakened on soft manufacturing data and US tariff pressure. Swiss PMI fell to 48.8, marking a fifth consecutive contraction, while CPI surprised to the upside at 0.2% YoY.
Outlook: If Swiss data continues to disappoint and US Dollar remains supported, USD/CHF may remain elevated. Tariff developments and SNB commentary will be watched closely.
Final Summary
Sterling steadied ahead of the BoE decision, while the Euro softened on weak sentiment data. The US Dollar remains firm amid Fed rate cut speculation and stable macro indicators. Commodity-linked currencies like the Aussie and Loonie are mixed, with domestic data and trade developments in focus. The Swiss Franc weakened on soft manufacturing data and tariff pressure.