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Market Insight 08-10-2025

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  • Market Insight 08-10-2025

Daily Market Update: 8 October 2025

Key Currency Pair Movements

GBP/EUR

  • Summary: The GBP/EUR pair is rising towards 1.1540 in the European session.
  • Outlook: Pound Sterling (GBP) is appreciating against the Euro (EUR) following the release of much weaker-than-expected German Industrial Production data, which fell by 4.3% MoM in August. However, the upside for the cross could be limited as the Pound faces challenges amid growing market expectations of a Bank of England (BoE) interest rate cut by the end of the year. Investors are awaiting a speech from BoE Chief Economist Huw Pill later today for fresh monetary policy cues.

GBP/USD

  • Summary: After losing about 0.5% on Tuesday, GBP/USD is edging lower and trading near 1.3400 to start the European session.
  • Outlook: The pair faces selling pressure as the US Dollar’s (USD) safe-haven demand has increased amid political turmoil in Japan and France. Pound Sterling may struggle amid rising expectations for a BoE interest rate cut by year-end, driven by increasing concerns over the UK labour market. Investors expect the British currency to trade on the sidelines amid this uncertainty about the BoE’s monetary policy outlook.

EUR/USD

  • Summary: The pair struggles to hold its ground and is declining toward 1.1600 in the European morning, marking its third consecutive day of depreciation.
  • Outlook: The Euro (EUR) is under pressure from the growing political crisis in France, which has been exacerbated by the resignation of Prime Minister Sébastien Lecornu, putting the country’s 2026 fiscal budget at risk. Although Lecornu assured today that a budget will be approved and dismissed the possibility of new elections, which helped trim some losses to trade near 1.1630. The lack of progress in restoring US government funding is also boosting the safe-haven US Dollar, adding to the pressure on the pair.

AUD/USD

  • Summary: The AUD/USD pair slides further to near 0.6560.
  • Outlook: The Aussie pair extends its Tuesday’s downside move as the US Dollar (USD) continues to outperform its peers, following political developments in Japan and France. Investors await Australia’s one-year forward Consumer Inflation Expectations data for October on Thursday.

USD/CAD

  • Summary: The pair continues to gain ground for the second successive session, trading around 1.3960.
  • Outlook: The pair appreciates as the US Dollar strengthens, supported by a rise in US Consumer Inflation Expectations for the year ahead to 3.4% in September. However, the upside could be limited as the commodity-linked Canadian Dollar (CAD) receives support from higher Crude Oil (WTI) prices, trading around $62.00 per barrel, following a modest OPEC+ output hike. Despite this, the market is pricing in nearly a 95% chance of a Fed rate cut in October, which could eventually limit the Greenback’s gains.

USD/CHF

  • Summary: The pair revisits the monthly high, trading slightly above 0.8000 around 0.8010.
  • Outlook: The pair strengthens as the US Dollar (USD) extends its upside, driven by safe-haven flows despite the US government shutdown entering its second week. The Swiss Franc (CHF) is facing downside pressure as easing Swiss job market conditions (Unemployment Rate at 3.0% in September) and cooling inflationary pressures (CPI deflated by 0.2% MoM) point to hopes that the Swiss National Bank (SNB) could push interest rates into negative territory.

Final Summary

The US Dollar (USD) is extending its rebound midweek, with the USD Index climbing to its highest level since early August near 99.00. This strength comes from increased safe-haven demand due to political developments in Japan and France. US lawmakers failed again to resolve funding disputes on Tuesday, and the government shutdown has passed the one-week mark. The ongoing shutdown is expected to be a major drag on the USD’s outlook, but for now, safe-haven demand prevails.

Focus is now on the release of the Federal Reserve (Fed) minutes of the September policy meeting at 18:00 GMT, which will provide a detailed explanation of the decision to cut interest rates by 25 basis points.