18/12/2025
Written by: Ian Morley
Daily Currency Market Update – 16th December 2025
GBP/EUR
Summary: GBP/EUR held steady just below 1.1400 after UK labour market data. The ILO Unemployment Rate rose to 5.1% in the three months to October, while Claimant Count increased by 20.1K in November. Sterling attracted some bids on stronger‑than‑expected wage growth (Average Earnings Ex‑Bonuses +4.6% y/y vs 4.5% forecast), but BoE cut expectations remain firm with markets pricing a 25bps reduction to 3.75% on Thursday. Meanwhile, ECB policymakers reiterated comfort with current rates, reinforcing expectations of a hold.
Outlook: GBP/EUR may remain capped unless UK CPI surprises positively tomorrow. ECB tone and Eurozone PMIs later today will guide sentiment.
GBP/USD
Summary: GBP/USD consolidated near 1.3370, recovering initial losses after UK employment data. Sterling’s rebound was supported by stronger wage growth, though weak labour demand (job losses of 17K in the three months to October) tempered upside. The Dollar traded flat ahead of US NFP data, with markets expecting +40K jobs in November and unemployment steady at 4.4%.
Outlook: GBP/USD may remain rangebound until US NFP release. BoE decision Thursday and UK CPI Wednesday will be pivotal.
EUR/USD
Summary: EUR/USD traded steady at 1.1750, close to two‑and‑a‑half‑month highs, with upside capped at 1.1760–1.1770. Eurozone PMIs are expected to show modest improvement in December, while US NFP and Retail Sales later today will provide fresh direction. The Dollar Index remained pinned near multi‑month lows around 98.15.
Outlook: Euro may remain supported unless US data surprises positively. ECB decision Thursday and US NFP today will shape momentum.
AUD/USD
Summary: AUD/USD slipped modestly to 0.6630, extending a four‑day decline. Mixed Australian jobs data and weaker Chinese macro releases weighed on sentiment, while global risk tone remained soft. RBA’s hawkish stance limited deeper losses, with Governor Bullock signalling rate cuts may not be needed.
Outlook: AUD may remain resilient if RBA tone stays hawkish. US NFP and Chinese data will guide direction.
USD/CAD
Summary: USD/CAD traded flat near 1.3775, consolidating recent losses to multi‑month lows. CAD remained supported by steady inflation (headline CPI +2.2% y/y, core CPI +2.9% y/y) and BoC’s hawkish tilt. Divergence with Fed’s dovish stance weighed on USD, though weaker oil prices capped CAD gains.
Outlook: CAD may strengthen further if oil stabilises. US NFP and Canadian trade data later today will provide fresh impetus.
USD/CHF
Summary: USD/CHF held calm near 0.7960 ahead of US NFP. The Dollar remained defensive as markets priced further Fed cuts, while Swiss government projections showed inflation averaging just 0.2% in 2025–26, limiting SNB policy normalization prospects.
Outlook: USD/CHF may remain pressured unless US data surprises positively. US NFP today and SNB inflation outlook will shape CHF sentiment.
Final Summary
Sterling steadied after UK employment data, with stronger wage growth offset by weak labour demand. The Euro consolidated near highs ahead of PMIs and US NFP, while the Dollar remained fragile as markets priced further Fed easing. The Australian Dollar dipped on weaker jobs and China data but held supported by RBA hawkishness. The Canadian Dollar consolidated near multi‑month highs on steady inflation, while the Swiss Franc traded firm as USD/CHF hovered near 0.7960.