01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 22nd July 2025
GBP/EUR
Summary: GBP/EUR slipped to 1.1525 as the Euro gained ground ahead of Thursday’s ECB rate decision. While the ECB is expected to hold rates at 2%, hawkish commentary and a widening trade surplus have supported the single currency. Sterling remains under pressure from persistent UK fiscal concerns and a cooling labour market, with markets pricing in an 89% chance of a BoE rate cut in August.
Outlook: If ECB rhetoric remains firm and UK data continues to disappoint, GBP/EUR may drift lower. Focus is now on Eurozone lending data and any updates on US–EU trade negotiations.
GBP/USD
Summary: GBP/USD edged lower to 1.3480 after Monday’s 0.6% rally, as the Dollar stabilised amid rising risk aversion. Tensions between President Trump and Fed Chair Powell escalated, with Powell referred to the DoJ for alleged perjury. Meanwhile, US Commerce Secretary Lutnick reaffirmed the 1st August tariff deadline, adding to market caution.
Outlook: Powell’s speech and the Richmond Fed Manufacturing Index will be key. If Fed independence concerns deepen and trade uncertainty persists, GBP/USD could remain volatile.
EUR/USD
Summary: EUR/USD holds near 1.1685 after a two-day rally, supported by softer US yields and cautious optimism around trade talks. The Euro has broken above a bearish channel, suggesting potential for further gains, though sentiment remains fragile ahead of the August 1 deadline.
Outlook: ECB’s Bank Lending Survey and Powell’s remarks will guide direction. If trade tensions escalate or Fed credibility erodes further, EUR/USD may extend its recovery.
USD/AUD
Summary: AUD/USD trades around 0.6500, pressured by subdued risk sentiment and dovish RBA minutes. The central bank signalled further easing may be warranted, though members stressed the need for confirmation of inflation slowdown. Weak Chinese retail sales and tariff uncertainty continue to weigh.
Outlook: If US–China trade talks stall and RBA signals imminent cuts, AUD/USD may soften further. However, any improvement in risk appetite could offer support.
USD/CAD
Summary: USD/CAD dipped to 1.3680 as Fed independence concerns and falling oil prices offset each other. The Loonie remains vulnerable to Trump’s 35% tariff threat, though Canadian fundamentals remain relatively stable.
Outlook: Powell’s speech and crude price trends will be pivotal. If Fed credibility weakens and oil stabilises, USD/CAD may drift lower.
USD/CHF
Summary: USD/CHF softened to 0.7980 as safe-haven demand for the Swiss Franc intensified. Tariff uncertainty and speculation around Powell’s future continue to weigh on the Dollar, while Swiss trade data showed a strong surplus.
Outlook: If geopolitical tensions escalate and Fed commentary remains cautious, USD/CHF could test fresh multi-year lows below 0.7950.
Final Summary
Currency markets remain cautious as political pressure on the Fed and global trade tensions dominate sentiment. Sterling is weighed down by UK fiscal risks and labour market softness, while the Euro finds support ahead of the ECB decision. The US Dollar stabilises but remains vulnerable to credibility concerns. Commodity-linked currencies like the Aussie and Loonie are mixed, and the Swiss Franc continues to attract safe-haven flows. Focus now turns to Powell’s speech and midweek data for fresh direction.