28/10/2025
Written by: Ian Morley
Daily Currency Market Update – 17th September 2025
GBP/EUR
Summary: GBP/EUR tests support at 1.1500 following UK inflation data. Headline CPI rose 3.8% y/y in August, slightly below expectations of 3.9%. Core CPI eased to 3.6% y/y, while services inflation slowed to 4.7% from 5.0%. Traders now await Eurozone HICP and ECB President Lagarde’s speech later today.
Outlook: Sterling may remain under pressure if inflation appears to have peaked. Euro sentiment could be influenced by final HICP readings and Lagarde’s tone ahead of the Fed decision.
GBP/USD
Summary: GBP/USD trades near 1.3640 ahead of the Fed’s policy announcement. UK inflation data showed a modest slowdown, with core and services CPI both easing. The Dollar remains weak as markets price in a 25bps Fed rate cut, with a small chance of a 50bps move.
Outlook: GBP/USD may react sharply to Fed guidance and dot plot projections. BoE decision tomorrow will also be pivotal for Sterling direction.
EUR/USD
Summary: EUR/USD eases from Tuesday’s four-year high of 1.1879, trading around 1.1855. The Euro faces modest profit-taking ahead of the Fed decision, while traders await final Eurozone HICP data.
Outlook: Euro may remain supported if Fed signals further easing. ECB commentary and inflation data will shape near-term momentum.
AUD/USD
Summary: AUD/USD trades cautiously after two days of gains, with traders awaiting the Fed’s rate decision. RBA Assistant Governor Hunter reiterated a forward-looking stance, noting inflation is close to target.
Outlook: AUD may remain firm if Fed delivers dovish guidance. Australian employment data and China trade developments will be key.
USD/CAD
Summary: USD/CAD holds near 1.3750 ahead of BoC and Fed decisions. Canadian CPI rose to 1.9% y/y in August, slightly below expectations. Traders expect a 25bps BoC rate cut today.
Outlook: CAD may weaken if BoC signals further easing. Fed commentary and oil price trends will also influence direction.
USD/CHF
Summary: USD/CHF trades near 0.7860, its lowest level in 14 years, as Fed dovish bets weigh on the Dollar. Swiss producer inflation fell 0.6% m/m in August, marking a fourth consecutive decline.
Outlook: USD/CHF may remain vulnerable if Fed signals aggressive easing. SNB may consider negative rates if inflation remains subdued.
Final Summary
Sterling softens as UK inflation shows signs of peaking, while the Euro steadies ahead of final HICP data and Lagarde’s speech. The US Dollar remains weak ahead of the Fed’s rate decision, with markets pricing in a 25bps cut and watching for dovish guidance. Commodity currencies are mixed, with AUD steady and CAD awaiting BoC direction. The Swiss Franc gains as inflation cools and safe-haven demand persists.