02/03/2026
Written by: Ian Morley
Daily Currency Market Update – 4th December 2025
GBP/EUR
Summary: GBP/EUR recovered to 1.1400 after finding support at 1.1360, aided by stronger UK services PMI (final 51.3 vs flash 50.5). Eurozone services PMI was revised higher to 53.6, its best in 30 months, reinforcing ECB’s steady stance. Despite Sterling’s bounce, medium‑term prospects remain capped by BoE cut expectations for December.
Outlook: GBP/EUR may remain defensive unless UK growth surprises. Eurozone inflation and ECB tone will guide direction.
GBP/USD
Summary: GBP/USD held near 1.3350, extending gains from Reeves’ budget relief rally. Sterling outperformed peers as Fed cut bets surged to 89% following weak US ADP data (-32K jobs in November). Analysts caution the rally may be short‑lived given dovish BoE expectations and soft UK data.
Outlook: GBP/USD may consolidate unless US labour data surprises. Michigan sentiment and PCE inflation will be key drivers.
EUR/USD
Summary: EUR/USD eased to 1.1655 after touching highs near 1.1677. The Euro remained supported by strong services PMI (53.6) and ECB’s steady stance, while USD weakness persisted on dovish Fed expectations. Traders await Eurozone Retail Sales and US Jobless Claims.
Outlook: Euro may remain firm unless US yields rise. ECB commentary and US employment data will be pivotal.
AUD/USD
Summary: AUD/USD advanced above 0.6600, its highest since late October, supported by RBA’s hawkish tone. Governor Bullock warned inflation remains above target, reducing easing expectations. Rising Fed cut bets (~90% probability) added further support, despite muted reaction to October trade surplus (A$4.4bn).
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 bounced modestly to 1.3960 after touching one‑month lows near 1.3935. USD attempted recovery, though gains were capped by dovish Fed sentiment and firmer oil prices. Divergence between Fed’s easing bias and BoC’s hawkish pause limited upside.
Outlook: CAD may strengthen if labour data surprises positively. US PCE and Canadian jobs report will be key drivers.
USD/CHF
Summary: USD/CHF edged higher to 0.8010 after softer Swiss CPI (0% y/y in November vs 0.1% expected). The weak inflation print reinforced expectations of accommodative SNB policy, weighing on CHF. USD remained pressured by dovish Fed expectations, though Jobless Claims may provide fresh impetus.
Outlook: USD/CHF may consolidate unless US data surprises. SNB policy stability and Swiss inflation outlook will shape CHF sentiment.
Final Summary
Sterling extended gains on budget relief and stronger PMI, though BoE cut expectations capped upside. The Euro held firm on robust services data and ECB stability, while the US Dollar remained pressured by weak ADP employment and dovish Fed sentiment. The Australian Dollar rallied on RBA hawkishness, the Canadian Dollar steadied near one‑month lows ahead of jobs data, and the Swiss Franc softened on weaker inflation.