Market Insight 25-02-2026

• Written by: Ian Morley
• 25/02/2026

Daily Currency Market Update – Wednesday, 25 February 2026

Market Overview

The US Dollar struggles to extend Tuesday’s rebound as risk sentiment improves and investors rotate back into equities. The USD Index trades softer near 97.70, giving back part of yesterday’s gains as markets digest President Trump’s State of the Union address and ongoing tariff uncertainty.

Trump reiterated that tariffs were central to the US economic “turnaround,” dismissed inflation concerns, and insisted that most trading partners want to maintain existing deals despite the Supreme Court ruling. Markets remain sceptical, with investors watching closely for further tariff announcements under Section 122 and Section 232 frameworks.

EUR/USD climbs back toward 1.1800, GBP/USD trades above 1.3500, and AUD/USD rallies to a two‑week high above 0.7100 after Australian inflation surprised to the upside. USD/CAD holds just below 1.3700, while USD/CHF softens as safe‑haven flows favour the Swiss Franc.

GBP/EUR

GBP/EUR ~1.1460

The cross stabilises after early selling pressure linked to UK political risks.

Drivers

• UK political uncertainty rises ahead of Thursday’s by‑election in Manchester Gorton & Denton.
• A heavy Labour defeat could reignite leadership speculation around PM Starmer.
• EU freezes US trade‑deal ratification following Trump’s tariff escalation.
• Eurozone remains more vulnerable to trade disruptions than the UK, limiting EUR upside.
• ECB President Lagarde speaks later today.

Outlook: GBP/EUR likely to remain sensitive to UK political headlines and Eurozone data revisions.

GBP/USD

GBP/USD ~1.3520

Sterling gains despite dovish BoE commentary as USD softens post‑SOTU.

Drivers

• GBP/USD rises as the Dollar loses momentum after Trump’s State of the Union speech.
• BoE Governor Bailey signalled scope for rate cuts but stressed inflation is on track to return to 2%.
• MPC member Taylor reiterated the need for 2–3 more cuts before reaching neutral.
• Improved risk sentiment supports GBP.
• DXY trades lower near 97.65.

Outlook: GBP/USD remains constructive above 1.3500; upside capped unless USD selling accelerates.

EUR/USD

EUR/USD ~1.1800

The Euro advances as renewed USD selling offsets lingering trade uncertainty.

Drivers

• EUR/USD rebounds as tariff‑related uncertainty weighs on the Dollar.
• Trump confirmed temporary 10% global tariffs for 150 days, with a move to 15% underway.
• Fed minutes showed reluctance to cut rates until disinflation progress resumes.
• ECB’s Lagarde reiterated that policy remains “in a good place.”
• Final Eurozone CPI and German GDP revisions due today.

Outlook: EUR/USD supported above 1.1780; further gains depend on Eurozone data and Fed commentary.

AUD/USD

AUD/USD ~0.7100

The Australian Dollar surges after hotter‑than‑expected inflation data.

Drivers

• Australian CPI held at 3.8% YoY, above expectations.
• Trimmed Mean CPI rose to 3.4%, reinforcing RBA tightening expectations.
• RBA maintains a hawkish bias; inflation risks remain elevated.
• USD softens after Trump’s SOTU and improved global risk tone.

Outlook: AUD/USD remains bullish above 0.7080; next resistance sits near 0.7130.

USD/CAD

USD/CAD ~1.3690

The pair holds steady as traders await Trump’s speech and monitor oil dynamics.

Drivers

• USD/CAD trades just below 1.3700, lacking conviction.
• Oil supported by geopolitical tensions ahead of Thursday’s US–Iran talks.
• Fed officials maintain a hawkish tone, limiting USD downside.
• Canadian GDP due Friday; expected 0.1% MoM.

Outlook: USD/CAD remains range‑bound; a breakout requires fresh catalysts from US or Canadian data.

USD/CHF

USD/CHF ~0.7730

The Dollar weakens as Trump’s tariff rhetoric weighs on sentiment.

Drivers

• USD/CHF dips as markets react to Trump’s SOTU comments on tariffs.
• CHF supported by safe‑haven flows amid US–Iran tensions.
• SNB expected to keep rates steady as inflation remains at 0.1%.
• Swiss GDP and US PPI due Friday.

Outlook: USD/CHF likely to remain heavy; geopolitical developments will drive intraday moves.

Final Summary

The US Dollar loses momentum as risk appetite improves and markets digest Trump’s State of the Union address. Sterling strengthens despite dovish BoE commentary, while the Euro recovers as USD selling resumes. The Australian Dollar outperforms after hotter inflation data, and CAD remains steady ahead of key GDP figures. CHF continues to benefit from safe‑haven demand. With no major US data today, Fed speakers and Eurozone revisions will guide FX markets into Thursday’s session.