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Market Insight 02-10-2025

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  • Market Insight 02-10-2025

Daily Market Update: 2 October 2025

Key Currency Pair Movements

GBP/EUR

  • Summary: GBP/EUR remains in a tight range as the Eurozone data calendar is quiet.
  • Outlook: Pound Sterling (GBP) continues to be supported by the positive revision to the UK’s Q2 GDP figures earlier this week. The Euro (EUR) is finding underlying strength from the strong Eurozone inflation data released yesterday (HICP), which is supporting the European Central Bank’s (ECB) position that it is unlikely to cut rates soon.

GBP/USD

  • Summary: The pair is consolidating its gains and is trading comfortably above 1.3450 in the European morning.
  • Outlook: The Pound is maintaining its strength, but its upward movement is capped as the US Dollar (USD) has found a modest floor after its recent deep decline. The USD is still fundamentally weak due to the ongoing government shutdown and worse-than-expected private sector jobs data (ADP).

EUR/USD

  • Summary: The pair holds its ground around 1.1750, having briefly surged to a weekly high near 1.1780 before losing traction on Wednesday.
  • Outlook: The Euro (EUR) is supported by the previous day’s strong German and Eurozone inflation figures. However, the weak US Automatic Data Processing (ADP) private sector jobs report, which showed a significant decline of 32,000 jobs, has reinforced market bets for a dovish Federal Reserve (Fed), limiting the pair’s upside.

AUD/USD

  • Summary: The AUD/USD pair is trading around 0.6600, continuing its consolidation phase.
  • Outlook: The pair is being held in check by the broader market uncertainty, despite the US Dollar’s five-day losing streak. Traders are balancing the persistent bearish pressure on the USD with caution ahead of other market events.

USD/CAD

  • Summary: The pair is trading around 1.3935, showing a slightly firmer tone than the broad US Dollar Index.
  • Outlook: The USD/CAD is holding up relatively well compared to other majors, as oil prices remain subdued despite the US Dollar’s overall weakness caused by the US government shutdown and disappointing US employment data (ADP).

USD/CHF

  • Summary: The USD/CHF pair is trading cautiously around 0.7970 as the US Dollar Index struggles for direction.
  • Outlook: The pair remains on the defensive due to the ongoing bearish sentiment surrounding the USD. Adding to the Swiss Franc’s (CHF) momentum, the latest Swiss CPI report showed a slight decline, but Swiss National Bank (SNB) President Martin Schlegel stated the central bank has a high bar for pushing rates into negative territory, which has led to mixed signals for the currency.

Final Summary

Uncertainty continues to grip the markets as the US government shutdown enters its second day, causing the US Dollar (USD) to struggle and the USD Index to edge lower for the fifth consecutive trading day. Investor sentiment has been hit hard by the US private-sector employment report from Automatic Data Processing (ADP), which showed an unexpected decline of 32,000 jobs in September, marking the largest drop since March 2023. This dismal data has led traders to ramp up bets that the Federal Reserve (Fed) will deliver two more rate cuts by the end of the year.

The shutdown has immediate practical consequences, as key data releases, including the weekly Initial Jobless Claims and Factory Orders for August, are officially delayed. Investors will now focus on the Challenger Job Cuts report for September later in the day. The Euro (EUR) and Pound Sterling (GBP) are benefiting from the USD’s weakness, supported by earlier strong inflation and GDP data, respectively.