01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 1st August 2025
GBP/EUR
Summary: GBP/EUR trades in the mid-1.15s, with the Euro extending its recovery for a second consecutive day. Eurozone inflation is expected to ease below the ECB’s 2% target, while final Manufacturing PMI figures are likely to confirm a modest improvement. Sterling remains pressured by soft UK consumption and employment data, fuelling expectations of a BoE rate cut next week.
Outlook: If Eurozone HICP confirms disinflation and UK PMI remains in contraction, GBP/EUR may stay range-bound. Monetary policy divergence continues to weigh on the Pound.
GBP/USD
Summary: GBP/USD hovers near 1.3200, struggling to recover after extending its weekly slide. The Dollar remains firm as traders trim Fed rate cut bets following strong US GDP and sticky PCE inflation. Trump’s Executive Order raised Canadian tariffs to 35% and set a 10% baseline rate, adding to trade uncertainty.
Outlook: Today’s US Nonfarm Payrolls and ISM Manufacturing PMI will be pivotal. If labour data impresses and Fed rhetoric stays hawkish, GBP/USD could face renewed downside.
EUR/USD
Summary: EUR/USD consolidates above 1.1400 after a sharp three-day decline. The Euro remains under pressure from trade deal fallout and cautious ECB commentary, while the Dollar is buoyed by strong macro data and reduced Fed easing expectations.
Outlook: Eurozone inflation and US employment figures will guide direction. If US data surprises to the upside, EUR/USD may retest recent lows.
USD/AUD
Summary: AUD/USD steadies after a six-day losing streak, supported by confirmation that Australia’s 10% tariff rate remains unchanged. However, weak Chinese PMI and softer Australian PPI and CPI data continue to weigh.
Outlook: If US NFP beats expectations and Chinese growth concerns persist, AUD/USD may struggle to hold gains. RBA policy signals and trade headlines remain key.
USD/CAD
Summary: USD/CAD climbs above 1.3860, its highest since late May, following Trump’s tariff hike on Canadian imports from 25% to 35%. Canadian officials expressed disappointment, while the BoC’s dovish tone adds further pressure to the Loonie.
Outlook: US labour data and Canadian GDP will be pivotal. If trade tensions escalate and Canadian fundamentals soften, USD/CAD could extend gains.
USD/CHF
Summary: USD/CHF holds near 0.8150 after Trump imposed a 39% tariff on Swiss goods, exceeding prior expectations. The Swiss government expressed regret, while the Dollar remains supported by strong data and delayed Fed rate cut expectations.
Outlook: If US NFP surprises and geopolitical tensions persist, USD/CHF may remain elevated. Swiss reaction and global sentiment will shape direction.
Final Summary
Markets remain cautious ahead of key US labour and manufacturing data. Sterling is soft across the board as BoE rate cut expectations build, while the Euro steadies amid disinflation signals and trade uncertainty. The US Dollar continues to outperform on strong macro data and hawkish Fed tone. Commodity-linked currencies like the Aussie and Loonie are pressured by domestic softness and tariff developments. The Swiss Franc faces headwinds from aggressive US trade policy. Focus now turns to Nonfarm Payrolls and ISM PMI for fresh momentum.