08/12/2025
Written by: Ian Morley
Daily Currency Market Update – 1st December 2025
GBP/EUR
Summary: GBP/EUR steadied last week but longer‑term risks remain divided. Rabobank and SocGen maintain a bearish outlook, warning parity risks linger into 2026, while Bank of America sees scope for appreciation toward 1.19 next year. Reeves’ Autumn Budget raised £26bn in taxes, creating fiscal headroom but leaving growth concerns intact.
Outlook: GBP/EUR may remain pressured unless UK growth surprises. ECB fiscal tensions and Eurozone inflation data will guide sentiment.
GBP/USD
Summary: GBP/USD consolidated near 1.3230 after gaining ~1% last week. Sterling was capped by dovish BoE expectations, with markets pricing a December cut to 3.75%. Reeves’ budget reinforced fiscal discipline but gilt yields eased to 4.44%. The Dollar weakened as Fed cut bets surged to 87.5% for December.
Outlook: GBP/USD may remain firm unless US ISM PMI surprises. UK fiscal clarity and BoE policy will shape direction.
EUR/USD
Summary: EUR/USD traded just above 1.1600, consolidating last week’s gains. The Euro remained supported by Fed easing expectations, though German PMI is expected to confirm contraction at 49.7. Traders await Eurozone HICP inflation on Tuesday.
Outlook: Euro may remain supported unless US yields rise. ECB commentary and Eurozone inflation will be pivotal.
AUD/USD
Summary: AUD/USD slipped to 0.6540 after six days of gains, pressured by weaker Chinese PMI (49.9). Stronger Australian CPI (3.8% y/y) tempered RBA easing expectations, limiting losses. The Dollar remained pressured by dovish Fed sentiment.
Outlook: AUD may regain ground if domestic inflation momentum persists. RBA tone and Chinese data will guide direction.
USD/CAD
Summary: USD/CAD hovered near 1.3980 after stalling below 1.4000. Higher oil prices and stronger Canadian GDP (+0.6% q/q in Q3) supported CAD, curbing BoC easing expectations. The Dollar remained vulnerable on Fed cut bets.
Outlook: CAD may strengthen if oil remains firm. Canadian GDP and US ISM PMI will be key drivers.
USD/CHF
Summary: USD/CHF edged higher to 0.8050 after Swiss GDP disappointed (-0.5% q/q in Q3). The Dollar remained pressured by Fed cut expectations (~85% probability for December), while CHF lacked momentum on weak domestic data.
Outlook: USD/CHF may consolidate unless Fed tone shifts. SNB policy stability and Swiss indicators will shape CHF sentiment.
Final Summary
Sterling steadied but remains capped by BoE cut expectations, while the Euro consolidated gains ahead of Eurozone inflation data. The US Dollar weakened as dovish bets intensified despite upcoming ISM PMI. The Australian Dollar dipped on weak Chinese PMI but held firm on domestic inflation. The Canadian Dollar gained on stronger GDP and oil, while the Swiss Franc softened on weak growth.