08/01/2026
Written by: Ian Morley
Daily Currency Market Update – 22nd December 2025
GBP/EUR
Summary: GBP/EUR strengthened to 1.1430 after the UK’s final Q3 GDP reading confirmed 0.1% quarterly growth. Sterling found support from the BoE’s fourth rate cut of the year, with markets now pushing back expectations for further easing. The upgraded 2025 GDP forecast (1.5% from 1.0%) also helped the Pound. Meanwhile, the ECB held rates steady last week, with Lagarde reiterating policy is “in a good place” and forecasts showing inflation returning to 2% by 2028.
Outlook: GBP/EUR may remain supported in the near term, though Eurozone stability and ECB’s steady stance could limit upside.
GBP/USD
Summary: GBP/USD edged higher toward 1.3400 as the Dollar softened ahead of Tuesday’s US Q3 GDP release. Sterling gained after Q3 GDP confirmed at 0.1%, though the BoE’s guidance of “zero growth” in Q4 keeps sentiment cautious. The DXY traded marginally lower around 98.60 as markets awaited fresh US data.
Outlook: GBP/USD remains constructive above the 20‑day EMA (1.3329). A break above 1.3471 could open further upside, though US GDP will be the key driver.
EUR/USD
Summary: EUR/USD posted modest gains above 1.1700 after the ECB signalled it is done easing for now. The pair trades around 1.1710 as markets digest last week’s ECB pause and upgraded growth/inflation projections. Fed policy divergence continues to support the Euro, with markets pricing more US cuts than the Fed’s own projections.
Outlook: EUR/USD may remain steady into the holiday period, with US GDP the next major catalyst.
AUD/USD
Summary: AUD/USD gained toward 0.6630 after the PBOC left Loan Prime Rates unchanged (1‑yr at 3.00%, 5‑yr at 3.50%). The Aussie was supported by expectations of a hawkish RBA, with markets pricing a 27% chance of a February hike. The USD softened despite cautious Fed commentary, helping AUD recover from last week’s declines.
Outlook: AUD/USD may remain supported ahead of Tuesday’s RBA Minutes. Chinese data and US GDP will influence direction.
USD/CAD
Summary: USD/CAD held near 1.3800 as rising oil prices supported the Canadian Dollar. WTI climbed above $57 on escalating geopolitical tensions involving Venezuela and Russia. CAD sentiment was also supported by BoC’s view that policy is “about the right level.”
Outlook: USD/CAD may drift lower if oil continues to firm. US GDP and Canadian retail sales will be key inputs this week.
USD/CHF
Summary: USD/CHF slipped to 0.7940 as the Dollar softened ahead of US GDP. CHF held firm despite limited clarity on SNB policy, with markets expecting no return to negative rates. Traders await Tuesday’s Swiss ZEW Expectations survey for fresh signals.
Outlook: USD/CHF may remain under pressure unless US GDP surprises to the upside.
Final Summary
Geopolitical tensions drove risk aversion at the start of the week, sending gold to a new record high above $4,400. Sterling firmed on confirmed Q3 GDP growth, while the Euro held steady after the ECB’s policy pause. The US Dollar softened ahead of Tuesday’s GDP release, supporting AUD and CAD. CHF remained firm as USD/CHF drifted lower.