12/12/2025
Written by: Ian Morley
Daily Currency Market Update – 10th December 2025
GBP/EUR
Summary: GBP/EUR posted modest gains above 1.1460 as hawkish BoE commentary provided support. Deputy Governor Lombardelli warned of upside inflation risks and favoured slower rate cuts, while Ramsden echoed the case for gradual easing. Despite this, markets still price an 88% probability of a December cut to 3.75%. Meanwhile, ECB President Lagarde reiterated a cautious stance, noting policy remains data‑dependent, with inflation close to target.
Outlook: GBP/EUR may remain supported if BoE rhetoric stays hawkish. Eurozone sentiment and ECB tone will guide direction.
GBP/USD
Summary: GBP/USD traded near 1.3320, gaining as Sterling rose ahead of Governor Bailey’s comments. BoE policymakers favoured gradual easing, contrasting with market expectations of a December cut. The Dollar weakened slightly as traders awaited the Fed’s policy decision later today, with markets pricing an 87.6% chance of a 25bps cut.
Outlook: GBP/USD may consolidate until Fed clarity. Bailey’s remarks and UK GDP Friday will be key drivers.
EUR/USD
Summary: EUR/USD picked up to 1.1640 after bouncing from 1.1615 lows. The Euro held firm on stronger German industrial data and hawkish ECB tone, while USD remained subdued ahead of the Fed decision. Traders await Powell’s press conference and the dot plot for guidance on 2026 policy.
Outlook: Euro may remain supported unless Fed delivers a hawkish surprise. ECB commentary and US projections will be pivotal.
AUD/USD
Summary: AUD/USD consolidated around 0.6640, holding recent gains near two‑month highs. RBA’s hawkish tilt, with Governor Bullock noting rate cuts may not be needed, underpinned AUD. Divergent RBA–Fed outlooks favoured Aussie bulls, while traders awaited Fed clarity and Chinese inflation data.
Outlook: AUD may remain firm if Fed signals dovishness. RBA stance and US projections will guide direction.
USD/CAD
Summary: USD/CAD edged higher to 1.3855, trading cautiously ahead of BoC and Fed decisions. BoC is expected to hold rates at 2.25% after strong Canadian labour data, while Fed is anticipated to cut by 25bps. Trump’s tariff threats and weaker oil capped CAD gains.
Outlook: CAD may strengthen if BoC signals policy pause. Fed statement and Canadian labour trends will be key drivers.
USD/CHF
Summary: USD/CHF consolidated around 0.8060, flat ahead of Fed and SNB decisions. Markets price an 87.6% chance of a Fed cut today, while SNB is expected to hold rates at 0% tomorrow. Softer Swiss inflation reinforced accommodative policy expectations.
Outlook: USD/CHF may remain rangebound unless Fed tone shifts. SNB stance and Fed projections will shape CHF sentiment.
Final Summary
Sterling gained modestly on hawkish BoE remarks, while the Euro held firm on stronger German data and ECB caution. The US Dollar traded subdued ahead of the Fed decision, with markets pricing a December cut. The Australian Dollar consolidated near highs on RBA hawkishness, the Canadian Dollar steadied ahead of BoC policy, and the Swiss Franc softened as USD/CHF held flat.