09/01/2026
Written by: Ian Morley
Daily Currency Market Update – 5th December 2025
GBP/EUR
Summary: GBP/EUR traded at 1.1450, supported by Sterling’s resilience despite dovish BoE expectations. Signs of a slowing UK economy and rising bets for a December BoE rate cut (25bps to 3.75%) weigh on GBP sentiment. Meanwhile, markets expect the ECB to keep rates unchanged at 2.00% in December, with analysts projecting stability through 2026.
Outlook: GBP/EUR may soften if UK data weakens further. Eurozone GDP and Employment revisions later today will guide direction.
GBP/USD
Summary: GBP/USD held steady near 1.3360 as Sterling extended gains from its recent rally. The move was supported by upwardly revised UK Composite PMI (51.2 in November) and relief from Reeves’ budget. The Dollar remained pressured as Fed cut bets held near 87% following weak US labour data.
Outlook: GBP/USD may consolidate unless US PCE inflation surprises. UoM sentiment and Fed policy outlook will be key drivers.
EUR/USD
Summary: EUR/USD regained traction to 1.1660 after Thursday’s pullback. The Euro held firm as markets awaited Eurozone GDP and Employment revisions, while the Dollar remained defensive on dovish Fed expectations.
Outlook: Euro may remain supported unless US inflation surprises. Eurozone data and US PCE will be pivotal.
AUD/USD
Summary: AUD/USD consolidated above 0.6600, near two‑month highs, as RBA’s hawkish stance offset unimpressive trade data. Governor Bullock reiterated inflation risks remain elevated, reducing easing expectations. Fed cut bets (~90% probability) added further support.
Outlook: AUD may remain firm if US PCE confirms sticky inflation. RBA tone and US data will guide direction.
USD/CAD
Summary: USD/CAD traded flat near 1.3950 as investors awaited Canadian labour data. Unemployment is expected to rise to 7% in November, potentially reinforcing BoC easing expectations. USD remained pressured by dovish Fed sentiment.
Outlook: CAD may strengthen if employment data surprises positively. Canadian jobs report and US PCE inflation will be key drivers.
USD/CHF
Summary: USD/CHF slipped to 0.8030, pressured by Fed cut expectations (~85% probability) and speculation over Powell’s successor. Softer Swiss CPI (0% y/y in November) reinforced accommodative SNB policy, limiting CHF gains.
Outlook: USD/CHF may remain soft unless US inflation surprises. SNB policy stability and US data will shape CHF sentiment.
Final Summary
Sterling held firm near 1.3360, supported by upward PMI revisions, though BoE cut expectations capped upside. The Euro regained ground ahead of GDP revisions, while the US Dollar remained pressured by dovish Fed sentiment despite stronger jobless claims. The Australian Dollar consolidated near two‑month highs on RBA hawkishness, the Canadian Dollar awaited labour data, and the Swiss Franc softened on weaker inflation.