28/10/2025
Written by: Ian Morley
Daily Currency Market Update – 1st September 2025
GBP/EUR
GBP/EUR fell to 1.1530 following hotter-than-expected German CPI data. German inflation rose to 2.2% YoY in August, exceeding the 2.1% forecast. HICP climbed to 2.1% YoY, also above expectations. Political uncertainty in France adds downside risk to the Euro. BoE speakers are scheduled later this week, with traders reassessing rate cut expectations.
GBP/USD
GBP/USD trades with a positive bias above 1.3500. The pair is supported by divergence in BoE-Fed policy expectations. A modest USD uptick caps gains ahead of final UK Manufacturing PMI and key US macro data later this week.
EUR/USD
EUR/USD trades firmer around 1.1705. The Euro is supported by rising Fed rate cut expectations, with markets pricing in an 89% chance of a 25bps cut at the September meeting. ECB President Lagarde is scheduled to speak later today.
AUD/USD
AUD/USD holds below 0.6550. The Aussie steadies after four days of gains, supported by stronger Australian inflation and China’s Caixin Manufacturing PMI returning to expansion at 50.5. Domestic Building Permits fell 8.2% m/m in July.
USD/CAD
USD/CAD trades around 1.3740, pressured by rising Fed rate cut expectations. Canadian markets are closed for Labor Day. Oil prices remain weak, with WTI trading near $63.50.
USD/CHF
USD/CHF trades cautiously near 0.8000. The pair is weighed by expectations of a Fed rate cut and upcoming Swiss CPI data. US Dollar Index trades near 97.60.
Final Summary
The US Dollar remains under pressure amid growing expectations of a Fed rate cut, with key employment data due later this week. Sterling is supported by BoE policy divergence, while the Euro gains on stable German inflation and dovish Fed sentiment. Commodity currencies are steady, with AUD buoyed by Chinese data and CAD constrained by oil weakness. The Swiss Franc trades cautiously ahead of domestic inflation figures.