01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 7th August 2025
GBP/EUR
Summary: GBP/EUR trades lower as Sterling softens ahead of the Bank of England’s expected rate cut. The Euro remains broadly steady despite weaker German Industrial Production, which fell 1.9% MoM in June — well below expectations.
Outlook: All eyes are on the BoE’s decision and Governor Bailey’s remarks. A dovish tone could weigh further on the Pound, while Euro resilience may keep the cross under pressure.
GBP/USD
Summary: GBP/USD hovers near 1.3350, subdued ahead of the BoE’s policy announcement. Markets anticipate a 25 bp cut, with a 7–3 vote forecast. US Dollar weakness persists amid growing Fed rate cut expectations and uncertainty around Chair Powell’s replacement.
Outlook: Sterling may face downside risk if the BoE signals further easing. US jobless claims and Fed commentary will guide Dollar sentiment.
EUR/USD
Summary: EUR/USD holds firm around 1.1675, unfazed by disappointing German data. Industrial Production dropped 1.9% MoM and the Trade Balance narrowed to €14.9bn. The Euro remains supported by USD softness and cautious optimism around EU-US trade discussions.
Outlook: Further Euro gains depend on sustained Dollar weakness and clarity from upcoming US labour data. German data alone unlikely to shift momentum.
USD/AUD
Summary: AUD/USD rises above 0.6500, buoyed by a stronger-than-expected Australian Trade Surplus of AUD 5.36bn. Exports surged 6.0% while imports fell 3.1%. The Aussie also benefits from China’s robust trade data and easing US Dollar.
Outlook: AUD may extend gains if risk sentiment holds and US data disappoints. RBA rate cut expectations remain a headwind.
USD/CAD
Summary: USD/CAD dips to 1.3730, pressured by dovish Fed signals and anticipation of Canadian labour data. Fed officials continue to support rate cuts amid softening US economic indicators.
Outlook: Canadian jobs data on Friday will be pivotal. A weak print could revive BoC easing bets and support USD/CAD upside.
USD/CHF
Summary: USD/CHF trades just above mid-0.8000s, weighed by persistent USD weakness. The pair finds support from Switzerland’s 39% US export tariff and a broadly positive risk tone, which limits CHF safe-haven demand.
Outlook: Fed rate cut expectations and US data will steer direction. CHF may remain capped unless risk sentiment deteriorates.
Final Summary
Sterling remains under pressure ahead of the BoE’s rate decision, while the Euro holds firm despite weak German data. The US Dollar continues to soften on rising Fed cut expectations and leadership uncertainty. Commodity currencies gain on strong trade data, and the Swiss Franc trades cautiously amid tariff concerns and mixed sentiment.