12/12/2025
Written by: Ian Morley
Daily Currency Market Update – 11th December 2025
GBP/EUR
Summary: GBP/EUR drifted lower to around 1.1420 as traders remained cautious ahead of next week’s BoE decision. MPC members are divided, with Lombardelli warning of inflation risks, Ramsden favouring gradual cuts, and Dhingra arguing policy is too restrictive. Markets price an 88% chance of a 25bps cut to 3.75% on 18th December. Meanwhile, hawkish ECB rhetoric and firmer Sentix investor confidence (-6.2 vs -7.4 prior) supported the Euro.
Outlook: GBP/EUR may remain pressured unless UK GDP surprises positively. ECB tone and Eurozone growth trends will guide sentiment.
GBP/USD
Summary: GBP/USD traded close to 1.3400, holding gains after the Fed’s rate cut. Sterling remained firm as BoE members backed gradual easing, while investors awaited Bailey’s comments and UK GDP data due Friday. The Dollar struggled after the Fed lowered rates by 25bps to 3.50%–3.75% and signalled only one cut in 2026.
Outlook: GBP/USD may consolidate until UK GDP release. Fed guidance and BoE rhetoric will shape direction.
EUR/USD
Summary: EUR/USD held near 1.1695, just below two‑month highs, after Fed’s dovish cut weakened the Dollar. The Euro’s rally stalled amid risk‑averse sentiment triggered by Oracle’s weak earnings and renewed AI bubble fears. ECB President Lagarde reiterated policy stability and hinted at possible growth forecast upgrades.
Outlook: Euro may remain supported unless risk aversion deepens. US Jobless Claims and ECB tone will be pivotal.
AUD/USD
Summary: AUD/USD slipped modestly to above mid‑0.6600s after mixed Australian jobs data. Employment fell by 21.3K in November, offsetting a steady unemployment rate at 4.3%. RBA’s hawkish stance limited downside, with Governor Bullock noting rate cuts may not be needed. USD weakness after Fed’s dovish cut provided support.
Outlook: AUD may remain resilient if RBA tone stays hawkish. US data and Fed outlook will guide direction.
USD/CAD
Summary: USD/CAD hovered just below 1.3800, its lowest since October, as CAD outperformed on BoC’s hawkish tilt and stronger oil prices. BoC held rates at 2.25% and Governor Macklem said policy is “about the right level.” Divergence with Fed’s dovish stance weighed on USD.
Outlook: CAD may strengthen further if oil remains firm. US and Canadian trade data later today will provide fresh impetus.
USD/CHF
Summary: USD/CHF fell to 0.7990 after SNB held rates at 0% as expected. Inflation forecasts were revised slightly lower, while GDP projections improved modestly. SNB reiterated willingness to intervene in FX markets if needed. Market reaction was positive for CHF, with USD/CHF slipping despite Fed’s dovish cut.
Outlook: USD/CHF may remain pressured unless Fed signals hawkishness. SNB commentary and US Jobless Claims will shape CHF sentiment.
Final Summary
Sterling held firm near 1.3400 but GBP/EUR softened as BoE divisions weighed. The Euro consolidated near highs after Fed’s dovish cut, though risk aversion capped gains. The Australian Dollar dipped on weaker jobs data but remained supported by RBA hawkishness. The Canadian Dollar outperformed on BoC stability and oil recovery, while the Swiss Franc strengthened after SNB held rates steady.