08/01/2026
Written by: Ian Morley
Daily Currency Market Update – 23rd December 2025
GBP/EUR
Summary: GBP/EUR rose to 1.1460 after UK Q3 GDP was confirmed at 0.1% q/q, matching expectations. Sterling remained supported by the BoE’s message that while rates are on a downward path, further cuts will be gradual. Markets now price at least one cut in H1 2026, with a 50% chance of a second by year‑end. Meanwhile, the ECB held rates steady last week, with Lagarde emphasising that policy is “in a good place” and not pre‑committing to any future path.
Outlook: GBP/EUR may remain supported in the near term, though ECB stability and Eurozone data later this week could limit upside.
GBP/USD
Summary: GBP/USD extended its rally toward 1.3500, reaching its highest level since early October. Sterling outperformed as markets expect the BoE to ease gradually in 2026, while the Dollar weakened sharply ahead of today’s US Q3 GDP release. The DXY fell toward 98.00 as traders priced in at least two Fed cuts in 2026.
Outlook: GBP/USD remains constructive while above 1.3329 (20‑day EMA). A break above 1.3471 could open further gains, though US GDP at 13:30 GMT will be decisive.
EUR/USD
Summary: EUR/USD climbed to 1.1760 as Fed easing expectations weighed on the Dollar. The pair rebounded from 1.1706 lows, supported by broad USD weakness and mixed Fed commentary. ECB officials continued to downplay hawkish speculation, though Schnabel noted that inflation risks remain skewed to the upside.
Outlook: Euro may remain supported unless US GDP surprises to the upside. Eurozone GDP data for Germany and Spain later this week will also be key.
AUD/USD
Summary: AUD/USD rallied to near 0.6680 after RBA minutes revealed policymakers discussed the possibility of rate hikes in 2026 due to rising inflation risks. Markets now price a 27% chance of a February hike, with a move fully priced by June. USD weakness added momentum, with the DXY nearing 97.87 lows.
Outlook: AUD/USD may extend gains if US GDP disappoints. RBA tightening expectations remain a strong tailwind.
USD/CAD
Summary: USD/CAD dipped below 1.3750 as Fed easing bets grew and oil prices climbed. WTI rose toward $57.90 amid escalating geopolitical tensions involving Venezuela and Ukraine. CAD remained supported by higher oil and expectations that the BoC will maintain its “right level” policy stance.
Outlook: USD/CAD may remain pressured if oil continues to firm. US GDP and Canadian retail sales will be key drivers.
USD/CHF
Summary: USD/CHF slipped toward 0.7900 as the Dollar weakened ahead of US GDP. Traders awaited the Swiss ZEW Expectations survey for fresh insight into business sentiment. Fed commentary remained mixed, with Miran warning that failing to ease policy risks recession, while Hammack argued for a pause to assess the impact of recent cuts.
Outlook: USD/CHF may remain under pressure unless US GDP beats expectations. SNB outlook remains steady with no return to negative rates expected.
Final Summary
The US Dollar weakened sharply ahead of today’s Q3 GDP release, boosting GBP, EUR, AUD and CAD. Sterling outperformed on expectations of a gradual BoE easing cycle, while the Euro gained on Fed–ECB divergence. The Australian Dollar rallied on hawkish RBA minutes, and CAD strengthened on rising oil prices. CHF firmed as USD/CHF drifted lower ahead of Swiss sentiment data.