08/01/2026
Written by: Ian Morley
Daily Currency Market Update – 18th December 2025
GBP/EUR
Summary: GBP/EUR held around 1.1380 as traders await both BoE and ECB decisions. UK CPI slowed more than expected in November (headline 3.2% y/y vs 3.5% forecast, prior 3.6%), reinforcing dovish expectations. Markets price a near‑100% probability of a BoE cut to 3.75% today, with scope for further easing in 2026. Meanwhile, ECB is widely expected to keep rates steady at 2%, with speculation of possible hikes later in 2026.
Outlook: GBP/EUR may remain pressured unless BoE signals a pause. ECB projections and Lagarde’s comments will guide direction.
GBP/USD
Summary: GBP/USD traded near 1.3365 after sliding close to 1.3300 on Wednesday. Sterling weakened on softer UK inflation, while the Dollar consolidated ahead of US CPI. BoE cut expectations remain firm, with no press conference scheduled after today’s decision.
Outlook: GBP/USD may remain rangebound until US CPI release. BoE decision will be pivotal for Sterling’s tone.
EUR/USD
Summary: EUR/USD steadied near 1.1730 after bouncing from 1.1700 lows. The Euro consolidated ahead of ECB’s policy announcement, with investors expecting rates to remain unchanged. US CPI later today will provide fresh direction for USD.
Outlook: Euro may remain supported unless ECB signals dovishness. US CPI and ECB projections will shape momentum.
AUD/USD
Summary: AUD/USD slipped to 0.6600, extending losses for a sixth day. Australia’s Consumer Inflation Expectations rose to 4.7% in December, supporting RBA’s hawkish stance. However, USD strength and softer risk tone weighed on AUD.
Outlook: AUD may regain ground if RBA tightening expectations firm. US CPI and Chinese data will guide direction.
USD/CAD
Summary: USD/CAD held near 1.3790 as traders awaited US CPI. The Dollar steadied after recent gains, while CAD faced headwinds from weaker oil prices despite geopolitical tensions. BoC’s stance that policy is “about the right level” continues to support CAD.
Outlook: CAD may strengthen if oil stabilises. US CPI later today will be key for USD/CAD direction.
USD/CHF
Summary: USD/CHF consolidated around 0.7950 ahead of US CPI. The Dollar held firm after recovering from lows earlier in the week, while CHF traded flat amid uncertainty over SNB’s policy outlook. Traders awaited US inflation data for fresh cues.
Outlook: USD/CHF may remain rangebound unless US CPI surprises. Fed commentary and SNB stance will shape CHF sentiment.
Final Summary
Sterling remained defensive ahead of BoE’s expected cut, while the Euro consolidated near highs before ECB’s meeting. The US Dollar steadied ahead of CPI, with markets cautious on Fed’s path. The Australian Dollar extended losses despite RBA hawkishness, CAD held firm near 1.3790 amid oil weakness, and CHF traded flat as USD/CHF consolidated.