01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 23rd July 2025
GBP/EUR
Summary: GBP/EUR trades near 1.1530 after a volatile session driven by BoE Governor Bailey’s testimony and a stronger Euro. Bailey acknowledged the steepening UK yield curve but framed it as a global phenomenon linked to trade uncertainty. The Euro gained on the back of upbeat ECB Lending Survey results, which showed rising mortgage and corporate credit demand despite trade tensions.
Outlook: If Eurozone consumer confidence improves and ECB commentary remains firm, GBP/EUR may remain under pressure. UK fiscal concerns and Thursday’s PMI data will be key for Sterling direction.
GBP/USD
Summary: GBP/USD holds firm near 1.3520, supported by a softer US Dollar despite confirmation of a US–Japan trade deal. Trump reduced tariffs on Japan to 15% and announced $550 billion in Japanese investment into the US. Sterling shrugged off renewed UK fiscal risks, including the second-highest June borrowing figure since 1993.
Outlook: Thursday’s UK PMI data and US flash PMIs will be pivotal. If UK business activity holds up and US inflation expectations rise, GBP/USD may remain range-bound with a slight upside bias.
EUR/USD
Summary: EUR/USD retreats to 1.1730 after hitting two-week highs above 1.1760. The Euro’s rally lost steam amid uncertainty over a US–EU trade deal and mild profit-taking ahead of Thursday’s ECB decision. Preliminary EC Consumer Sentiment is expected to improve slightly but remains well below long-term averages.
Outlook: If trade negotiations stall and ECB signals caution, EUR/USD could face renewed downside. A surprise in sentiment data or dovish Fed commentary may offer support.
USD/AUD
Summary: AUD/USD trades near 0.6560, extending its rebound for a fourth session. The Aussie is supported by improving US–China trade sentiment and Trump’s tariff deal with Japan. However, Westpac’s Leading Index slowed to 0.03% in June, and RBA minutes signalled further rate cuts may be warranted.
Outlook: If risk appetite holds and US data underwhelms, AUD/USD may remain supported. RBA commentary and Chinese growth signals will be key.
USD/CAD
Summary: USD/CAD dips to 1.3605, its lowest in two weeks, as trade uncertainty and Fed independence concerns weigh on the Dollar. Canadian PM Carney reiterated that Canada will not accept a bad deal, casting doubt on a resolution before the 1st of August deadline.
Outlook: If crude prices stabilise and US data disappoints, USD/CAD may extend its decline. Canadian trade positioning and Fed credibility will remain in focus.
USD/CHF
Summary: USD/CHF trades weakly near 0.7940, pressured by safe-haven demand for the Swiss Franc. The Dollar remains subdued despite trade deals with Japan and the Philippines, as investors await SNB Chair Schlegel’s speech and key US data later this week.
Outlook: If geopolitical tensions escalate and SNB signals caution, USD/CHF could test fresh multi-year lows. Durable Goods Orders and PMI data will guide near-term movement.
Final Summary
Sterling remains firm against the Dollar but soft against the Euro, as UK fiscal concerns persist and ECB credit conditions improve. The Euro’s rally has paused amid trade uncertainty, while the US Dollar continues to struggle with credibility concerns and mixed data. Commodity-linked currencies like the Aussie and Loonie are supported by improving sentiment and cautious central bank tones. The Swiss Franc remains resilient on safe-haven flows. Focus now turns to Thursday’s PMI releases and central bank commentary for the next directional cues.