29/10/2025
Written by: Ian Morley
Daily Currency Market Update – 22nd August 2025
GBP/EUR
Summary: GBP/EUR trades near 1.1560, supported by hotter-than-expected UK July inflation at 3.8% and upbeat August PMIs. Composite PMI rose to 53.0, reducing expectations for further BoE rate cuts this year. German and Eurozone PMIs also surprised to the upside, with Germany’s Composite PMI at 50.9.
Outlook: Traders await Germany’s Q2 GDP release. A stronger print may limit EUR downside, but GBP remains supported by resilient UK data and delayed BoE easing expectations.
GBP/USD
Summary: GBP/USD steadies around 1.3410 after four days of losses, as traders await Powell’s Jackson Hole speech. UK GfK Consumer Confidence improved to -17, a one-year high. US PMIs beat expectations, with Manufacturing at 53.3 and Composite at 55.4.
Outlook: Powell’s tone will be pivotal. A dovish tilt may support GBP/USD, while hawkish signals could extend Dollar strength. UK sentiment remains fragile amid inflation and tax concerns.
EUR/USD
Summary: EUR/USD softens to 1.1595, pressured by broad USD strength and cautious Fed commentary. Eurozone PMIs showed resilience, with Composite at 51.1 and Manufacturing at 50.5. Traders eye Powell’s speech and Germany’s GDP for near-term direction.
Outlook: A dovish Powell could lift EUR/USD, but ECB rate cut uncertainty and trade headwinds may cap gains. German GDP will be key to short-term sentiment.
USD/AUD
Summary: AUD/USD trades near 0.6414, a two-month low, as USD gains on strong PMIs and easing Fed cut expectations. Australian Consumer Inflation Expectations fell to 3.9%, while PMIs improved across the board. RBA delivered a 25bps cut, bringing OCR to 3.6%.
Outlook: AUD remains pressured by global risk sentiment and Fed dynamics. Further RBA easing is possible in November. Australian retail data and Powell’s speech will guide next moves.
USD/CAD
Summary: USD/CAD hits a three-month high at 1.3915, buoyed by strong US data and tempered Fed cut bets. Canada’s Industrial Product Price Index rose 0.7% in July, beating expectations.
Outlook: CAD may find support from reduced BoC easing scope, but USD strength dominates ahead of Powell’s speech. Canadian retail sales later today will be closely watched.
USD/CHF
Summary: USD/CHF climbs to 0.8100, a weekly high, as USD firms ahead of Powell’s Jackson Hole address. Fed officials signal caution on rate cuts, citing inflation risks. SNB remains under scrutiny amid low Swiss inflation and potential policy shifts.
Outlook: If Powell maintains a “wait and see” stance, USD/CHF may stay elevated. SNB commentary and global inflation dynamics will shape CHF sentiment.
Final Summary
The US Dollar continues its weekly uptrend, supported by strong PMI data and tempered Fed rate cut expectations. GBP finds support from resilient inflation and PMIs, while EUR remains cautious ahead of German GDP. Commodity-linked currencies like AUD and CAD face pressure from global headwinds and central bank divergence. All eyes now turn to Powell’s Jackson Hole speech for fresh policy cues.