01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 4th July 2025
GBP/EUR
Summary: GBP/EUR trades near 1.1600 as the Euro gains modest support from hawkish ECB rhetoric. President Lagarde reiterated the ECB’s commitment to achieving its inflation target, while a senior official warned that excessive Euro strength could push inflation below 2%. Meanwhile, the Pound stabilised after UK Prime Minister Starmer confirmed Chancellor Reeves will remain in her role, easing concerns over fiscal policy credibility.
Outlook: Eurozone PPI data and further ECB commentary will be key. If the Euro continues to strengthen and UK fiscal concerns resurface, GBP/EUR may remain under pressure.
GBP/USD
Summary: GBP/USD holds above 1.3650 despite a firmer Dollar following Thursday’s stronger-than-expected US Nonfarm Payrolls report. The Pound found support as Chancellor Reeves reaffirmed her position and commitment to fiscal discipline. However, the Dollar’s gains were capped by concerns over Trump’s tariff plans and the inflationary impact of his newly passed tax-and-spending bill.
Outlook: With US markets closed for Independence Day, trading may remain subdued. Focus shifts to next week’s tariff deadline and Fed commentary for further direction.
EUR/USD
Summary: EUR/USD rebounds to 1.1785 after dipping on Thursday. The Euro found support as investors digested mixed Eurozone data and hawkish ECB signals. Meanwhile, the Dollar retreated from post-NFP highs amid renewed concerns over US fiscal health and the looming tariff deadline.
Outlook: Eurozone inflation and US trade developments will guide direction. If tariff tensions escalate, EUR/USD could remain volatile.
USD/AUD
Summary: AUD/USD trades flat near 0.6570 after Thursday’s decline, pressured by strong US labour data and uncertainty over Trump’s tariff plans. The Aussie was also weighed down by a weaker Chinese Services PMI and a narrowing Australian trade surplus.
Outlook: Traders await Australia’s household spending data and next week’s RBA meeting. If risk sentiment improves and US data softens, AUD/USD may recover.
USD/CAD
Summary: USD/CAD holds near 1.3575, struggling to extend Thursday’s rebound. The Dollar’s gains were limited by fiscal concerns and subdued oil prices, while the Loonie remained supported by expectations of a trade deal with the US and stable Canadian fundamentals.
Outlook: With US markets closed, volatility may be limited. Focus turns to Canadian employment data and US tariff developments next week.
USD/CHF
Summary: USD/CHF trades around 0.7930, retreating from recent highs as the Swiss Franc remains supported by safe-haven demand and reduced expectations of further SNB rate cuts. Swiss CPI rose 0.1% YoY in June, defying expectations of a decline, while unemployment ticked up slightly to 2.9%.
Outlook: If US fiscal concerns persist and Swiss inflation remains firm, USD/CHF could test fresh multi-year lows.
Final Summary
Currency markets are relatively subdued with US markets closed for Independence Day. The Dollar initially rallied on strong NFP data but retreated as attention shifted to fiscal risks and Trump’s looming tariff deadline. Sterling stabilised after political reassurance from Chancellor Reeves, while the Euro found support from hawkish ECB commentary. Commodity-linked currencies remain mixed, and the Swiss Franc continues to benefit from safe-haven flows.