01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 3rd July 2025
GBP/EUR
Summary: GBP/EUR fell sharply to 1.1550 as political uncertainty and fiscal concerns weighed on the Pound. Chancellor Rachel Reeves faced scrutiny in Parliament over the government’s reversal of planned welfare cuts, triggering a sell-off in UK gilts and Sterling. The Euro gained on relative policy stability and a modest uptick in Eurozone inflation, which returned to the ECB’s 2% target.
Outlook: We will monitor Eurozone unemployment data and ECB commentary. If UK political tensions persist, GBP/EUR may remain under pressure.
GBP/USD
Summary: GBP/USD slipped to 1.3625 amid rising concerns over the UK’s debt position and political cohesion. Sterling was hit by the largest gilt sell-off since October 2022, while the Dollar held ground ahead of key US labour market data. The ADP report showed a surprise 33K drop in private payrolls, raising expectations for Fed rate cuts.
Outlook: The US Nonfarm Payrolls report and ISM Services PMI will be pivotal. A weak print could weigh on the Dollar and support GBP/USD, but UK fiscal jitters may limit gains.
EUR/USD
Summary: EUR/USD steadied near 1.1800 after marginal losses on Wednesday. The Euro remains supported by ECB policy stability, while the Dollar struggles with political pressure and fiscal concerns. A US-Vietnam trade deal added optimism but failed to lift the Greenback meaningfully.
Outlook: Eurozone Services PMI and US NFP data will guide direction. A soft US jobs report could reinforce EUR/USD’s bullish momentum.
USD/AUD
Summary: AUD/USD dipped below 0.6600 as the Aussie faced pressure from a weaker-than-expected trade surplus and softer Chinese Services PMI. Despite upbeat domestic PMI readings, the Australian Dollar struggled as traders awaited US labour data and assessed Fed rate cut prospects.
Outlook: If US data disappoints and Fed rhetoric remains dovish, AUD/USD could recover. However, weak Chinese demand may cap upside.
USD/CAD
Summary: USD/CAD extended its decline to 1.3585 after the ADP report signalled US labour market weakness. The Canadian Dollar was supported by fiscal optimism and trade negotiations, though falling oil prices limited gains.
Outlook: US NFP and Canadian economic data will be key. If US employment figures disappoint, USD/CAD may drift lower, barring further oil price declines.
USD/CHF
Summary: USD/CHF held near 0.7920, close to its lowest level since 2011, as traders awaited Swiss CPI data. The Swiss Franc remains supported by safe-haven demand and speculation that the SNB may push rates into negative territory if downside risks persist.
Outlook: Swiss inflation figures and US NFP data will shape near-term movement. A weak US print could push USD/CHF below 0.7900.
Final Summary
Currency markets remain cautious ahead of the US Nonfarm Payrolls report, with the Dollar struggling amid fiscal concerns and political pressure on the Fed. Sterling weakened on UK political instability and fiscal retreat, while the Euro held firm on policy stability. Commodity-linked currencies like the Aussie and Loonie are mixed on trade and data releases, and the Swiss Franc continues to attract safe-haven flows. Traders will closely watch today’s labour market data for the next directional cues.