01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 18th August 2025
GBP/EUR
Summary: GBP/EUR softened slightly as traders turned cautious ahead of today’s Trump–Zelenskyy meeting. Sterling remains supported by last week’s stronger-than-expected UK Q2 GDP print (+0.3% QoQ), which has tempered expectations for further BoE rate cuts. Meanwhile, the Euro gained modest support from peace optimism, with the US offering Ukraine security guarantees in lieu of NATO membership.
Outlook: If UK CPI surprises to the upside and ECB maintains its cautious tone, GBP/EUR may rebound. However, any breakthrough in Ukraine peace talks could favour the Euro.
GBP/USD
Summary: GBP/USD consolidates near 1.3550 after two weeks of gains. Sterling remains firm following upbeat UK growth and factory data, while the Dollar steadies ahead of Jackson Hole and today’s Trump–Zelenskyy meeting. Fed rate cut expectations remain elevated, with markets pricing an 82.6% chance of a September cut.
Outlook: UK inflation and Powell’s Jackson Hole speech will be pivotal. If UK CPI remains sticky and Fed signals dovish intent, GBP/USD may retest 1.3600.
EUR/USD
Summary: EUR/USD holds near 1.1700, supported by hopes of a Ukraine ceasefire and fading impact from last week’s hot US PPI data. The Eurozone Trade Balance is due today, though unlikely to shift sentiment. The Dollar remains subdued as traders await Fed guidance and geopolitical developments.
Outlook: If peace talks progress and Fed rhetoric stays dovish, EUR/USD may attempt a break above 1.1730. Otherwise, consolidation is likely.
USD/AUD
Summary: AUD/USD trades above 0.6500, extending gains after last week’s strong Australian employment data. The Aussie is supported by reduced urgency for further RBA easing and a softer US Dollar. Risk sentiment remains stable ahead of US-China trade talks and Jackson Hole.
Outlook: If Fed dovishness persists and China stabilises, AUD/USD may attempt further upside. RBA commentary and global trade headlines remain key.
USD/CAD
Summary: USD/CAD hovers near 1.3800, pressured by dovish Fed expectations and stable oil prices. The Loonie remains supported by BoC caution, with trimmed mean inflation holding at 3% in June. Traders await Canadian CPI data on Tuesday for fresh direction.
Outlook: If Canadian inflation remains elevated and Fed cut bets hold, USD/CAD may drift lower. Oil trends and tariff developments will also influence movement.
USD/CHF
Summary: USD/CHF ticks down to 0.8060, weighed by Fed rate cut speculation and cautious sentiment ahead of the Trump–Zelenskyy meeting. The Swiss Franc remains firm amid geopolitical uncertainty, though SNB may consider negative rates if inflation stays subdued.
Outlook: If peace talks stall and Fed signals easing, USD/CHF may remain range-bound. Swiss industrial data and Jackson Hole commentary will guide direction.
Final Summary
Sterling steadies ahead of UK CPI, while the Euro gains on peace optimism. The US Dollar remains subdued amid dovish Fed expectations and geopolitical caution. Commodity-linked currencies like the Aussie and Loonie are supported by domestic resilience and stable risk sentiment. The Swiss Franc trades cautiously ahead of industrial data and tariff developments.