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Market Insight 16-10-2025

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  • Market Insight 16-10-2025

Daily Market Update: 16 October 2025

Key Currency Pair Movements

GBP/EUR

  • Summary: The GBP/EUR pair breaks above 1.15.
  • Outlook: Pound Sterling (GBP) is finding support from a wave of positive domestic data, as UK GDP, Industrial Production, and Manufacturing Production all met or beat forecasts. The Euro remains underpinned by the general weakness of the US Dollar, which keeps the cross trading in a close, range-bound pattern.

GBP/USD

  • Summary: Pound Sterling holds steady against the US Dollar (USD) after extending its gains on Wednesday.
  • Outlook: The pair is supported by positive UK economic data, with the UK’s Gross Domestic Product (GDP) meeting forecasts with a 0.1% expansion in August, while Industrial and Manufacturing Production both showed stronger-than-expected growth. This domestic support, combined with the extended weakness in the US Dollar, is keeping the pair above 1.3550.

EUR/USD

  • Summary: The pair holds steady above 1.1650 in the European session.
  • Outlook: The pair’s movement is primarily driven by the broad decline in the US Dollar (USD). The Euro (EUR) is also supported as investors await the release of Eurozone industrial production data for August, which will provide the next domestic catalyst for the currency.

AUD/USD

  • Summary: The Australian Dollar is trading flat around 0.6550.
  • Outlook: Despite the US Dollar’s ongoing weakness, the risk-sensitive Australian Dollar (AUD) remains cautious. Its outlook is clouded by the renewed uncertainty in US-China trade relations, given China’s status as a major trade partner, which limits the pair’s upside momentum.

USD/CAD

  • Summary: The USD/CAD pair trades lower, with the Canadian Dollar gaining ground on Thursday.
  • Outlook: The decline in the US Dollar (USD) is compounded by the strength of the Canadian Dollar (CAD), which is finding support following Wednesday’s strong Canadian trade data. The report showed a C$2.3 billion surplus in August and solid growth in exports, underpinning the CAD’s performance.

USD/CHF

  • Summary: The pair is under modest pressure, trading near the 0.7935-0.7930 region.
  • Outlook: The safe-haven Swiss Franc (CHF) is supported by concerns about the prolonged US government shutdown and renewed US-China trade tensions. This, combined with dovish Federal Reserve (Fed) forecasts for further rate cuts, is exerting downward pressure on the US Dollar (USD).

Final Summary

The US Dollar (USD) continues to weaken against its major rivals, pressured by the uncertainty surrounding the US-China trade relations and a prolonged US government shutdown, which is stretching into a third week. This downside is being reaffirmed by dovish expectations from the Federal Reserve (Fed), with traders pricing in rate cuts in October and December. Fed Chair Jerome Powell commented on the labour market remaining mired in its “low-hiring, low-firing doldrums” through September, which has cemented the need for further monetary policy easing. Investors will now look to speeches from Fed Governors Christopher Waller and Michelle Bowman for a fresh impetus later in the North American session.