01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 13th August 2025
GBP/EUR
Summary: GBP/EUR holds near 1.1570 as investors await Thursday’s UK GDP release. The Euro is supported by optimism around the proposed US–Russia summit, though gains are capped by a sharp drop in ZEW sentiment. Germany’s ZEW Economic Sentiment fell to 34.7 in August from 52.7, while the Eurozone reading dropped to 25.1 from 36.1.
Outlook: If UK GDP surprises to the upside and ECB pause expectations hold, GBP/EUR may remain range-bound. Eurozone sentiment and UK growth data will be key drivers.
GBP/USD
Summary: GBP/USD extends gains to above 1.3500, supported by firm UK wage growth and tempered BoE rate cut expectations. The Dollar remains under pressure following softer US CPI data and rising Fed rate cut bets. Markets now price a 94% chance of a September cut.
Outlook: UK GDP and US retail sales will guide direction. If UK data holds and Fed commentary remains dovish, GBP/USD may test higher levels.
EUR/USD
Summary: EUR/USD trades near 1.1700, buoyed by USD weakness and stable Eurozone inflation. German HICP confirmed a 0.4% MoM rise and 1.8% YoY, while US CPI came in slightly softer than expected. Core US inflation rose to 3.1%, reinforcing Fed easing expectations.
Outlook: If Fed officials confirm dovish bias and Eurozone data remains stable, EUR/USD may attempt a break above 1.1700. Risk sentiment and trade headlines remain influential.
USD/AUD
Summary: AUD/USD trades near 0.6500, steady after the RBA’s expected 25 bp rate cut to 3.6%. Wage Price Index rose 0.8% QoQ, in line with expectations. The Aussie is supported by China’s tariff truce extension and resilient trade data.
Outlook: If risk appetite holds and US data remains soft, AUD/USD may attempt further gains. RBA commentary and Chinese growth signals remain pivotal.
USD/CAD
Summary: USD/CAD trades near 1.3780, supported by weaker oil prices and dovish Fed expectations. Crude remains under pressure ahead of the Trump–Putin meeting, while Canadian jobs data looms.
Outlook: If Canadian employment disappoints and oil stays subdued, USD/CAD may push higher. Fed commentary and US retail data will also influence direction.
USD/CHF
Summary: USD/CHF trades around 0.8060, pressured by Fed rate cut expectations and soft US CPI. The Swiss Franc remains supported by safe-haven demand and low domestic inflation, which rose just 0.2% YoY in July.
Outlook: If Fed dovish signals persist and SNB maintains its stance, USD/CHF may remain range-bound. Trade tensions and global sentiment will shape direction.
Final Summary
Sterling remains firm ahead of UK GDP data, while the Euro holds gains despite weak sentiment indicators. The US Dollar continues to soften on rising Fed rate cut expectations, with CPI data reinforcing the dovish outlook. Commodity currencies are mixed, and the Swiss Franc trades cautiously amid tariff concerns and subdued inflation.