02/03/2026
Written by: Ian Morley
Daily Currency Market Update – 3rd December 2025
GBP/EUR
Summary: GBP/EUR posted modest gains above 1.1380 despite firm BoE dovish expectations. UK PM Starmer reiterated the need for lower rates to boost growth, reinforcing market confidence in a December cut to 3.75% (90% probability). Meanwhile, Eurozone inflation edged higher in November, supporting ECB’s stance that rates are at the “right level.”
Outlook: GBP/EUR upside may be capped unless UK data surprises. Eurozone PPI and Lagarde’s remarks will guide sentiment.
GBP/USD
Summary: GBP/USD recovered to 1.3250, supported by Sterling’s relief rally after Reeves’ budget and upgraded OBR growth forecasts (2025 GDP raised to 1.5%). Despite dovish BoE expectations, Sterling gained as USD weakened on speculation that Kevin Hassett could succeed Powell as Fed Chair.
Outlook: GBP/USD may remain firm unless US ADP or ISM Services PMI surprise. BoE policy and fiscal clarity remain key.
EUR/USD
Summary: EUR/USD extended gains to 1.1640, supported by sticky Eurozone inflation and improved risk sentiment. Divergence between ECB’s steady stance and Fed’s dovish outlook boosted the Euro. Traders await Eurozone Services PMI and Lagarde’s testimony.
Outlook: Euro may remain supported unless US data strengthens. ECB tone and US employment figures will be pivotal.
AUD/USD
Summary: AUD/USD climbed above 0.6580, its highest since late October, shrugging off softer Q3 GDP (+2.1% y/y vs 2.2% expected). RBA’s hawkish tilt, with Governor Bullock warning of persistent inflation risks, underpinned the Aussie. Fed cut bets (~90% probability) added further support.
Outlook: AUD may remain firm if inflation proves sticky. RBA tone and US PCE data later this week will guide direction.
USD/CAD
Summary: USD/CAD traded cautiously near 1.3960 as USD remained pressured by dovish Fed expectations. Trump hinted Hassett is his preferred Fed Chair candidate, reinforcing easing speculation. CAD awaited November labour data, with unemployment expected to rise to 7%.
Outlook: CAD may strengthen if employment data surprises positively. US ADP and Canadian labour figures will be key drivers.
USD/CHF
Summary: USD/CHF steadied around 0.8050 after recent volatility. Weak US ISM manufacturing data reinforced Fed cut expectations (~85% probability), while CHF was supported despite Swiss GDP contracting -0.5% q/q in Q3.
Outlook: USD/CHF may remain soft unless US data surprises. SNB policy stability and Swiss CPI will shape CHF sentiment.
Final Summary
Sterling extended its relief rally despite dovish BoE expectations, while the Euro firmed on sticky inflation and ECB stability. The US Dollar weakened as Fed cut bets intensified and speculation grew over Powell’s successor. The Australian Dollar rallied on RBA hawkishness, the Canadian Dollar awaited labour data, and the Swiss Franc held firm as USD/CHF consolidated.