09/12/2025
Written by: Ian Morley
Daily Currency Market Update – 9th December 2025
GBP/EUR
Summary: GBP/EUR flat at 1.1450 as Sterling remains pressured by firm BoE cut expectations. Markets price a 90% probability of a 25bps reduction to 3.75% at next week’s meeting, amid weak UK labour conditions and softer inflation. Meanwhile, the Euro gained support from stronger German Industrial Production (+1.8% m/m in October) and improved Eurozone Sentix Investor Confidence (-6.2 in December vs -7.4 prior). ECB policymakers, including Schnabel, signalled comfort with investor bets on future hikes.
Outlook: GBP/EUR may remain defensive unless UK data surprises. Eurozone resilience and ECB tone will guide direction.
GBP/USD
Summary: GBP/USD consolidated above 1.3300, trading around 1.3320, as Sterling’s outlook remained uncertain. BoE external member Alan Taylor noted inflation could return to target soon, though dovish expectations persist. Investors await Fed’s policy decision tomorrow, with markets pricing a 25bps cut to 3.50%–3.75%.
Outlook: GBP/USD may remain rangebound until Fed clarity. BoE Governor Bailey’s speech Wednesday and UK GDP Friday will be key.
EUR/USD
Summary: EUR/USD traded at 1.1650, posting marginal gains after bouncing from 1.1616 lows. The Euro remained capped below 1.1650 as investors awaited US JOLTS Job Openings and ADP Employment data later today, ahead of the Fed decision. ECB’s Nagel is scheduled to speak, likely reiterating steady policy.
Outlook: Euro may remain supported unless US data surprises. Fed statement and dot plot tomorrow will be pivotal.
AUD/USD
Summary: AUD/USD climbed back toward 0.6650 after RBA Governor Bullock’s hawkish remarks. The RBA held rates at 3.6% but signalled inflation risks remain elevated, reducing easing expectations. Divergent RBA–Fed outlooks favoured AUD, with Fed cut bets (~90% probability) keeping USD defensive.
Outlook: AUD may remain firm if inflation proves sticky. China’s trade balance today and Fed decision tomorrow will guide direction.
USD/CAD
Summary: USD/CAD edged lower to 1.3845 despite strong Canadian employment data last week. CAD gains were capped by Trump’s tariff threats on Canadian fertilizer and weaker oil prices. Divergent BoC–Fed policy expectations warrant caution, with BoC expected to hold rates at 2.25% tomorrow.
Outlook: CAD may strengthen if BoC signals policy pause. US labour data today and Fed decision tomorrow will be key drivers.
USD/CHF
Summary: USD/CHF climbed to 0.8072, its highest since late November, as traders positioned ahead of Fed and SNB decisions. Markets price an 87% chance of a Fed cut tomorrow, while SNB is expected to hold rates at 0.00% Thursday. Softer Swiss inflation reinforced accommodative policy expectations.
Outlook: USD/CHF may consolidate unless Fed delivers a hawkish surprise. SNB stance and Fed projections will shape CHF sentiment.
Final Summary
Sterling traded cautiously as BoE cut expectations weighed, while the Euro held firm on stronger German data and ECB hawkish tone. The US Dollar remained defensive ahead of key labour data and tomorrow’s Fed decision. The Australian Dollar rallied on RBA hawkishness, the Canadian Dollar steadied amid tariff threats, and the Swiss Franc softened as USD/CHF climbed to one‑week highs.