Market Insight 22-10-2025

• Written by: Ian Morley
• 22/10/2025

Daily Market Update: 22 October 2025

Pound Sterling (GBP) weakens against its major rivals early Wednesday as markets assess softer-than-expected inflation data from the UK. The trading action continues to be dominated by headlines surrounding the US-China trade relations and the ongoing US government shutdown.

Key Currency Pair Movements

• GBP/EUR
  • Summary: The cross is falling nearly 0.4% on the day and trades at 1.1470 early Wednesday.
  • Outlook: The pair is under pressure due to broader Pound Sterling weakness following the softer-than-expected UK inflation data.
• EUR/USD
  • Summary: The pair holds steady at around 1.1600 after closing in negative territory for the third consecutive trading day on Tuesday.
  • Outlook: With no high-impact data on the European economic calendar, the pair’s action is influenced by movements in the US Dollar and broader market sentiment.
• GBP/USD
  • Summary: Stays under modest bearish pressure and is trading in negative territory below 1.3350 after the release of UK CPI data.
  • Outlook: The pair reacted to the UK’s annual inflation holding steady at 3.8% in September, a reading that came in below the market forecast of 4%.
• AUD/USD
  • Summary: The pair has dropped below 0.6550 as risk flows retreat.
  • Outlook: It remains under modest bearish pressure as the US Dollar maintains its strength amid speculation of a US-China trade deal.
• USD/CAD
  • Summary: Trades near 1.4000 early Wednesday, staying on the back foot.
  • Outlook: This follows data from Canada on Tuesday showing annual CPI inflation climbed to 2.4% in September from 1.9% in August, surpassing the market expectation of 2.3%.
• USD/CHF
  • Summary: The pair trades firmly near Tuesday’s high around 0.7970 during the Asian trading session.
  • Outlook: The pair exhibits strength as the US Dollar (USD) is broadly firm on hopes that the United States (US) and China will reach a trade deal soon. The Swiss Franc (CHF) faces mixed performance amid downside inflation risks.

Final Summary

The main focus remains on headlines surrounding the US-China relations and the ongoing government shutdown. Speculation for the US and China reaching a consensus intensified earlier this week after President Donald Trump commented that he hopes to reach a fair deal with Chinese leader Xi Jinping in South Korea; however, Trump expressed slight concerns regarding the likelihood of the meeting on Tuesday.

Investors await the delayed US Consumer Price Index (CPI) data for September, which will be published on Saturday due to the government shutdown. Economists expect the US headline inflation to have grown at an annual pace of 3.1% against 2.9% in August, with core figures also rising steadily by 3.1%.

In the UK, the Office for National Statistics (ONS) reported that annual inflation, as measured by the change in the Consumer Price Index (CPI), held steady at 3.8% in September, below the market forecast of 4%, which has weakened Pound Sterling (GBP). Meanwhile, the Swiss Franc (CHF) exhibits a mixed performance while investors seek fresh cues on whether the Swiss National Bank (SNB) would push interest rates into a negative territory, as the Swiss CPI deflated by 0.2% in September.