08/12/2025
Written by: Ian Morley
Daily Currency Market Update – 8th December 2025
GBP/EUR
Summary: GBP/EUR weakened to near 1.1420 after upbeat German Industrial Production data (+1.8% m/m in October vs -0.4% expected). The Euro gained support from stronger factory output and hawkish ECB commentary, with Isabel Schnabel signalling comfort with investor bets on future hikes. Meanwhile, BoE cut expectations for December remain firm, with markets pricing a 25bps reduction to 3.75% amid UK labour market weakness and fiscal tightening.
Outlook: GBP/EUR may remain pressured unless UK data surprises. Eurozone Sentix Investor Confidence later today will guide sentiment.
GBP/USD
Summary: GBP/USD consolidated around 1.3320 after last week’s rally to 1.3385. Sterling traded calmly ahead of the Fed’s policy decision, with investors expecting both the Fed and BoE to cut rates this month. UK unemployment rose to 5% in Q3, while October CPI eased to 3.6% y/y. BoE external member Alan Taylor’s speech later today may provide further guidance.
Outlook: GBP/USD may remain rangebound until Fed clarity. US JOLTS data tomorrow and Fed decision Wednesday will be pivotal.
EUR/USD
Summary: EUR/USD held firm at 1.1665, supported by hawkish ECB tone and stronger German factory data. Schnabel reiterated that the next ECB move could be a hike, while US Dollar weakness persisted ahead of Wednesday’s Fed meeting. The pair remained within last week’s range, with downside capped at 1.1640.
Outlook: Euro may remain supported unless Fed delivers a hawkish surprise. Eurozone Sentix confidence and US JOLTS data will guide direction.
AUD/USD
Summary: AUD/USD consolidated near 0.6640, its highest since September, as divergent RBA–Fed policy expectations underpinned the Aussie. RBA is expected to hold rates at 3.6% tomorrow, though Governor Bullock warned inflation remains above target, fuelling speculation of a hike next year. Traders await China’s trade balance data for near‑term impetus.
Outlook: AUD may remain firm if China’s data supports sentiment. RBA decision and Fed outlook will be key drivers.
USD/CAD
Summary: USD/CAD held near 1.3800, close to 11‑week lows, after strong Canadian employment data. November unemployment fell to 6.5% from 6.9%, with 53.6K full‑time jobs added. The robust labour report reduced expectations of a BoC cut, with rates likely held at 2.25% this week. Trade uncertainty with the US remains a headwind for CAD.
Outlook: CAD may remain supported unless Fed surprises hawkishly. BoC decision Wednesday and Fed policy will shape direction.
USD/CHF
Summary: USD/CHF steadied around 0.8010, supported by softer Swiss CPI (0% y/y in November) which reinforced accommodative SNB policy. The Dollar remained pressured by dovish Fed expectations, with markets pricing a 25bps cut on Wednesday.
Outlook: USD/CHF may remain soft unless Fed delivers a hawkish message. Swiss inflation outlook and Fed policy will guide CHF sentiment.
Final Summary
Sterling consolidated ahead of BoE and Fed decisions, while the Euro gained on stronger German data and hawkish ECB tone. The US Dollar remained pressured as markets priced a December Fed cut. The Australian Dollar held near multi‑month highs on RBA–Fed divergence, the Canadian Dollar strengthened on robust jobs data, and the Swiss Franc softened on weaker inflation.