01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 13th June 2025
GBP/EUR
Summary: GBP/EUR fell below 1.1740 as investors reacted to escalating Middle East tensions. Pound Sterling weakened as risk sentiment deteriorated following Israel’s airstrikes on Iran’s nuclear facilities. Meanwhile, the Euro found support as European Central Bank (ECB) officials signalled that the monetary easing cycle may be nearing its end.
Outlook: The market will monitor UK inflation expectations and German economic data, including the Harmonised Index of Consumer Prices (HICP) and Industrial Production figures. If risk aversion persists, GBP/EUR could remain under pressure.
GBP/USD
Summary: GBP/USD slumped to 1.3530 as geopolitical uncertainty drove investors toward safe-haven assets. The Pound faced sharp selling pressure after Israel launched airstrikes on Iran, triggering a flight to safety that strengthened the US Dollar. Meanwhile, markets are bracing for next week’s Federal Reserve and Bank of England policy meetings, with both central banks expected to hold rates steady.
Outlook: The Pound’s trajectory will depend on geopolitical developments and upcoming UK inflation data. If tensions escalate further, GBP/USD could see additional downside.
EUR/USD
Summary: EUR/USD retreated from multi-year highs above 1.1600 as risk aversion lifted the US Dollar. Israel’s attack on Iran overshadowed softer US inflation data, prompting investors to seek refuge in the Greenback. Despite this, the Euro remains supported by ECB policymakers’ hawkish stance, reinforcing expectations that the easing cycle may be nearing its end.
Outlook: Eurozone Industrial Production and Trade Balance figures will be key for EUR/USD direction. If risk-off sentiment persists, the pair may struggle to reclaim recent highs.
USD/AUD
Summary: AUD declined sharply as risk sentiment deteriorated following Israel’s military action against Iran. The Australian Dollar, often sensitive to global risk trends, fell more than 1% as investors moved into safe-haven assets. Meanwhile, US Producer Price Index (PPI) data showed weaker-than-expected inflation, reinforcing expectations for Federal Reserve rate cuts later this year.
Outlook: The Australian Dollar’s movement will depend on geopolitical developments and upcoming domestic economic indicators. If risk aversion remains elevated, AUD could face further downside.
USD/CAD
Summary: USD/CAD climbed to the mid-1.3600s as safe-haven flows into the US Dollar offset gains from surging crude oil prices. Oil prices spiked more than 9% following Israel’s attack on Iran, raising concerns about supply disruptions. Despite this, the Canadian Dollar struggled as investors sought refuge in the Greenback amid heightened geopolitical uncertainty.
Outlook: Crude oil price movements and US economic indicators will shape near-term USD/CAD direction. If tensions escalate further, safe-haven demand could keep the pair elevated.
USD/CHF
Summary: USD/CHF dropped to two-month lows near 0.8080 as heightened geopolitical risks bolstered demand for the Swiss Franc. Investors rushed into safe-haven assets following Israel’s airstrikes on Iran, driving the US Dollar lower. Meanwhile, Swiss inflation concerns continue to influence expectations regarding the Swiss National Bank’s policy stance.
Outlook: The market will monitor geopolitical developments and US policy signals for further USD/CHF movement. If safe-haven demand remains strong, the pair may continue its downward trajectory.
Final Summary
Currency markets are reacting sharply to Israel’s attack on Iran, with risk aversion driving investors toward safe-haven assets. The Pound weakened as geopolitical uncertainty overshadowed economic data, while the Euro remains supported by ECB hawkish signals. The US Dollar rebounded as investors sought safety, impacting commodity-linked currencies like the Australian and Canadian Dollars. The Swiss Franc strengthened as safe-haven flows surged. The market will closely watch geopolitical developments and upcoming inflation data for further market direction.