08/01/2026
Written by: Ian Morley
Daily Currency Market Update – 17th December 2025
GBP/EUR
Summary: GBP/EUR fell below 1.1370 after UK CPI data showed inflation slowing more than expected. Headline CPI rose 3.2% y/y in November (vs 3.5% forecast, 3.6% prior), while core CPI eased to 3.2% from 3.4%. Retail Price Index also softened to 3.8%. The weaker inflation reinforced expectations of a BoE rate cut to 3.75% on Thursday. Meanwhile, ECB officials signalled comfort with current rates, reducing easing expectations and supporting the Euro.
Outlook: GBP/EUR may remain pressured unless UK data surprises positively. Germany’s IFO survey and Eurozone HICP revisions later today will guide sentiment.
GBP/USD
Summary: GBP/USD slumped to near 1.3340 after UK CPI data, reversing Tuesday’s gains above 1.3450. Softer inflation and rising unemployment (ILO rate at 5.1%) bolstered expectations of a BoE cut. The Dollar rebounded as markets reassessed Fed policy after mixed US labour data, with NFP showing -105K jobs in October and +64K in November, unemployment rising to 4.6%.
Outlook: GBP/USD may consolidate until BoE decision Thursday. US CPI tomorrow will be pivotal for USD direction.
EUR/USD
Summary: EUR/USD retreated to 1.1710 after touching highs above 1.1800. The Euro corrected lower as investors digested mixed US employment data and awaited ECB’s policy meeting Thursday. Eurozone PMIs disappointed, with Manufacturing PMI at 49.2 and Services PMI at 52.6. US Retail Sales stalled in October, while unemployment rose to 4.6%.
Outlook: Euro may remain supported unless ECB signals dovishness. US CPI Thursday and ECB projections will shape momentum.
AUD/USD
Summary: AUD/USD declined for a fifth day, trading near 0.6630. The Aussie weakened despite speculation of an RBA hike as early as February, with CBA and NAB pointing to persistent inflation and capacity constraints. Preliminary PMIs showed mixed results, with Manufacturing at 52.2 but Services slipping to 51.0. USD strength limited AUD upside.
Outlook: AUD may remain resilient if RBA tightening expectations firm. US CPI and Fed commentary will guide direction.
USD/CAD
Summary: USD/CAD rebounded to 1.3770 after hitting three‑month lows near 1.3730. The Dollar gained as mixed US labour data failed to reinforce expectations of further Fed cuts. CAD remained supported by BoC’s stance that policy is “about the right level” and steady inflation (headline CPI 2.2%, trimmed mean 2.8%).
Outlook: CAD may strengthen further if oil stabilises. US CPI Thursday and BoC commentary will be key drivers.
USD/CHF
Summary: USD/CHF edged higher to 0.7960 as the Dollar rebounded. US labour data showed unemployment rising to 4.6% in November, while NFP added 64K jobs. Fed officials remained split on further easing, with markets pricing two cuts in 2026 despite the dot plot signalling only one. CHF traded steady ahead of SNB’s quarterly bulletin.
Outlook: USD/CHF may remain rangebound unless Fed signals hawkishness. US CPI Thursday and SNB commentary will shape CHF sentiment.
Final Summary
Sterling slumped after UK CPI slowed to 3.2%, reinforcing BoE cut expectations. The Euro corrected lower ahead of ECB’s meeting, while the Dollar rebounded on mixed labour data. The Australian Dollar extended losses despite RBA tightening speculation, the Canadian Dollar steadied near recent highs on BoC stability, and the Swiss Franc traded firm as USD/CHF edged higher.