02/03/2026
Written by: Ian Morley
Daily Currency Market Update – 2nd December 2025
GBP/EUR
Summary: GBP/EUR traded flat below 1.14 as markets awaited Eurozone HICP inflation. Softer UK inflation, a cooling labour market, and Reeves’ Autumn Budget reinforced expectations of a December BoE cut to 3.75%. Meanwhile, ECB policymakers signalled rates are “in a good place,” with Lagarde and Nagel comfortable holding steady.
Outlook: GBP/EUR may soften if Eurozone inflation surprises to the upside. BoE policy and UK fiscal clarity remain key drivers.
GBP/USD
Summary: GBP/USD consolidated near 1.3220, subdued by dovish BoE expectations and Starmer’s call for lower rates to boost growth. Gilt yields eased to 4.44% after Reeves’ tax hikes, while markets priced an 87% chance of a December Fed cut.
Outlook: GBP/USD may remain rangebound until US ADP and ISM Services PMI provide fresh impetus. BoE commentary will shape Sterling’s tone.
EUR/USD
Summary: EUR/USD hovered near 1.1615 after retreating from highs above 1.1650. The Euro held firm ahead of Eurozone inflation and unemployment data, while the Dollar drew support from higher Treasury yields following BoJ rate hike signals.
Outlook: Euro may remain supported unless inflation disappoints. ECB stance and US ISM Services PMI will be pivotal.
AUD/USD
Summary: AUD/USD traded flat near 0.6540, consolidating after recent gains. Weaker Chinese PMI (49.9) weighed on sentiment, though expectations of strong Australian Q3 GDP (+0.7% q/q, +2.2% y/y forecast) limited downside. Fed cut bets (~87% probability) also supported AUD.
Outlook: AUD may strengthen if GDP beats expectations. RBA tone and Chinese macro signals will guide direction.
USD/CAD
Summary: USD/CAD held near 1.4010, clinging to Monday’s recovery despite dovish Fed sentiment. The Dollar rebounded modestly, while CAD awaited November employment data. Oil prices remained firm, supporting the Loonie.
Outlook: CAD may gain if employment data surprises positively. US ADP and Canadian labour figures will be key.
USD/CHF
Summary: USD/CHF slipped to 0.8045, pressured by Fed cut expectations (~85% probability). Weak US ISM manufacturing data reinforced dovish sentiment, while CHF was supported despite Swiss GDP contracting -0.5% q/q in Q3.
Outlook: USD/CHF may remain soft unless US data surprises. SNB policy stability and Swiss CPI will shape CHF sentiment.
Final Summary
Sterling traded cautiously on dovish BoE expectations and fiscal headwinds, while the Euro consolidated ahead of key inflation data. The US Dollar steadied on higher yields despite weak ISM manufacturing, with Fed cut bets firmly in place. The Australian Dollar held flat ahead of GDP, the Canadian Dollar awaited labour data, and the Swiss Franc firmed as USD/CHF corrected lower.