01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 12th June 2025
GBP/EUR
Summary: GBP/EUR weakened to near 1.1750 after the UK economy contracted by 0.3% in April, exceeding expectations for a 0.1% decline. Industrial and Manufacturing Production figures also disappointed, adding to concerns about slower growth. The Euro found some stability following ECB President Christine Lagarde’s comments indicating a possible pause in further rate cuts.
Outlook: Traders will be watching ECB policymaker speeches later today. If officials signal prolonged monetary tightening, the Euro could gain further traction against the Pound.
GBP/USD
Summary: GBP/USD dipped toward 1.3550 after struggling to sustain gains near 1.3600. The Pound weakened as GDP figures showed a deeper contraction than expected, reinforcing expectations for Bank of England rate cuts later this year. Meanwhile, the US Dollar remains under pressure amid softer inflation data and ongoing trade uncertainty.
Outlook: The upcoming US Producer Price Index (PPI) release could drive market volatility. If producer inflation remains subdued, it may strengthen Fed rate-cut bets, weighing further on the Dollar.
EUR/USD
Summary: EUR/USD climbed above 1.1500, marking a seven-week high, as US Dollar weakness persisted. Softer-than-expected US CPI figures reinforced expectations for Federal Reserve easing, supporting the Euro. Meanwhile, President Trump’s latest trade threats created uncertainty, pressuring the Greenback.
Outlook: The market will be watching today’s US PPI inflation data to confirm broader price trends. If inflation remains tame, the Dollar may stay on the defensive, supporting further EUR/USD gains.
USD/AUD
Summary: AUD/USD holds losses near 0.6400, despite broader US Dollar weakness. The Australian Dollar remains pressured by rising geopolitical tensions in the Middle East, as investors shift toward safe-haven assets. Meanwhile, Australia’s Consumer Inflation Expectations rose to 5.0%, higher than the previous 4.1%, adding concerns about price stability.
Outlook: The focus will be on US trade developments and potential Middle East escalation. Any signs of easing global tensions may lift risk sentiment, supporting AUD/USD.
USD/CAD
Summary: USD/CAD softened near 1.3665 as poor US inflation data increased bets on a September Fed rate cut. Extended crude oil price gains have also supported the Canadian Dollar, with WTI crude holding firm above $66 per barrel.
Outlook: The markets will be watching US PPI and Canadian economic data for further directional cues. If inflation remains subdued, Fed rate-cut expectations may grow, weighing on USD/CAD.
USD/CHF
Summary: USD/CHF broke below 0.8200 as Middle East tensions escalated, increasing safe-haven demand for the Swiss Franc. Reports indicate that Israel may be preparing an operation into Iran, heightening geopolitical risks. Meanwhile, US CPI figures came in below expectations, reinforcing pressure on the Dollar.
Outlook: The market will monitor US geopolitical developments and Fed policy expectations. If safe-haven demand remains strong, USD/CHF may continue its downward trajectory.
Final Summary
Currency markets are reacting to weaker UK GDP data, US inflation concerns, and geopolitical uncertainties. The Pound remains under pressure amid growing BoE rate-cut expectations, while the Euro benefits from Fed rate-cut speculation and ECB hawkish signals. The US Dollar faces broad selling pressure, with commodity-linked currencies like AUD and CAD reacting to oil price trends and geopolitical risks. Looking ahead, traders will focus on US PPI inflation data and global trade negotiations for further market direction.