July 2025 Market Roundup

• Written by: Ian Morley
• 31/07/2025

Monthly Market Update: July 2025

Currency Movements:

US Dollar (USD)

The US Dollar experienced a volatile July, initially under pressure from concerns over central bank independence, fiscal uncertainty, and weaker inflation expectations. However, safe-haven demand and strong economic data—including Retail Sales and employment figures—helped the Greenback rebound mid-month. The confirmation of a US–EU trade deal and a hawkish tone from the Fed further supported the Dollar into month-end.

British Pound (GBP)
Sterling faced a difficult month, weakened by deteriorating domestic data and fiscal instability. Early support from UK–US trade optimism faded as weaker GDP, rising unemployment, and disappointing retail sales drove expectations of a Bank of England rate cut in August. The Pound reached multi-month lows against the Dollar and Euro but staged a modest recovery near month-end on short-covering and stabilising political sentiment.

Euro (EUR)
The Euro saw mixed performance. It benefited early in the month from stable Eurozone data and hawkish ECB commentary. However, the US–EU trade agreement, which imposed a 15% blanket tariff on transatlantic goods, sparked concerns about the outlook for German and French exports. Despite upbeat German Retail Sales and stronger Q2 GDP figures, inflation uncertainty and ECB caution capped further gains.

Swiss Franc (CHF)
The Swiss Franc maintained its role as the premier safe-haven currency. Despite minor pullbacks, CHF strengthened throughout July amid persistent geopolitical concerns, global central bank policy divergence, and US political uncertainty. USD/CHF traded below parity, hovering near multi-year lows by month-end.

Australian Dollar (AUD)
The Aussie had a choppy July, pressured early on by weak Chinese and domestic data, then supported by improved risk sentiment and upbeat Retail Sales. Nevertheless, RBA rate cut expectations and Chinese growth concerns kept AUD/USD capped near 0.6550.

Canadian Dollar (CAD)
The Canadian Dollar traded defensively in July. Early support from resumed US–Canada trade talks faded as Trump confirmed a 35% tariff on Canadian imports starting in August. Weak Retail Sales and soft oil prices added to downside pressure, although stronger-than-expected inflation figures helped limit losses late in the month.

Events Driving the Market:

1. US Fed Policy & Political Interference
   Concerns over central bank independence weighed on the USD early in July, but Fed Chair Powell’s hawkish tone and strong US data helped the Dollar recover. Market focus remained on September for the Fed’s next potential move.
2. Bank of England Rate Cut Speculation
   Weaker UK GDP, inflation, and employment data increased expectations of a BoE rate cut in August. However, cautious BoE commentary and stabilising political signals helped the Pound avoid further steep declines.
3. ECB & Eurozone Trade Outlook
   Despite solid GDP and Retail Sales data, the Euro was pressured by the fallout from the US–EU tariff deal. French and German leaders criticised the agreement, casting doubt on the Eurozone’s export outlook. ECB remained cautious, with HICP inflation figures in focus at month-end.
4. Safe-Haven Demand & Swiss Franc Strength
   Ongoing geopolitical risks, political tension in the US, and concerns over global monetary policy led to sustained demand for the Swiss Franc. The SNB’s dovish stance had little impact as investors prioritised safety.
5. Global Trade Developments
   The confirmation of a US–EU trade deal and uncertainty around US–Canada and US–China negotiations influenced risk sentiment throughout July. Commodity currencies fluctuated on these developments, with AUD and CAD remaining sensitive to global growth signals.

Market Outlook:

Heading into August, focus is now on the Fed’s next steps, BoE policy direction, and ECB inflation commentary. Sterling’s fate hinges on upcoming UK labour and inflation data, while the Euro remains at risk from trade friction and ECB signals. USD strength will be tested by Nonfarm Payrolls and CPI data.

Safe-haven demand is expected to persist, keeping the Swiss Franc supported. AUD and CAD may remain under pressure if Chinese data and global trade sentiment continue to deteriorate.