08/01/2026
Written by: Ian Morley
Daily Currency Market Update – 24th December 2025
GBP/EUR
Summary: GBP/EUR held steady at 1.1450 as the BoE’s cautious stance supported Sterling. The MPC cut rates to 3.75% last week in a tight 5–4 vote, with Governor Bailey stressing that further cuts will be gradual given persistent inflation. Markets price at least one cut in H1 2026, with a 50% chance of a second. Meanwhile, the ECB unanimously held rates steady for the fourth consecutive meeting, with Lagarde emphasising flexibility and keeping all options open.
Outlook: GBP/EUR may remain supported by BoE’s gradual easing stance, though ECB stability caps upside.
GBP/USD
Summary: GBP/USD extended gains to 1.3535, its highest in three months, as Sterling outperformed and the Dollar weakened despite stronger US GDP. UK inflation cooled to 3.2% y/y in November, but BoE guidance remains for gradual easing. US GDP grew 4.3% annualised in Q3, above expectations, yet dovish Fed expectations persisted. The DXY fell to 97.75, its lowest in 11 weeks.
Outlook: GBP/USD remains constructive above 1.3329 (20‑day EMA). A break above 1.3471 resistance could open further upside.
EUR/USD
Summary: EUR/USD climbed 0.3% to 1.1710, supported by broad USD weakness. Strong US GDP capped losses, but markets still expect the Fed to hold in January before easing later in 2026. Analysts cautioned that GDP strength may overstate underlying health, with growth driven by healthcare spending and inventories. Eurozone sentiment weakened, with German GfK confidence falling to -26.9.
Outlook: EUR/USD may remain firm unless US data surprises positively. Thin holiday trading could limit volatility.
AUD/USD
Summary: AUD/USD rallied to 0.6713, its highest since October 2024, supported by RBA tightening expectations and USD weakness. RBA minutes showed policymakers are less confident policy is restrictive enough, with inflation rising to 3.8% y/y in October. Markets now price a February hike at 3.85%, with NAB and CBA projecting tightening early next year.
Outlook: AUD/USD may remain supported if RBA hawkish expectations persist. US data and global risk sentiment will guide direction.
USD/CAD
Summary: USD/CAD fell to 1.3675, its lowest in five months, as CAD gained on rising oil prices and Fed easing bets. WTI rose to $57.90 amid heightened geopolitical tensions with Venezuela and Ukraine. Canada’s flash GDP showed 0.1% growth in November, easing concerns after October’s contraction. BoC held rates at 2.25%, signalling a data‑dependent pause.
Outlook: USD/CAD may remain pressured if oil stays firm. US GDP and Canadian data will provide fresh cues.
USD/CHF
Summary: USD/CHF slipped to 0.7880 after hitting a three‑month low of 0.7861. The Dollar weakened on dovish Fed expectations, while Swiss sentiment softened with the ZEW Expectations index falling to 6.2. UBS analysts upgraded Switzerland’s five‑year growth outlook, supporting CHF strength.
Outlook: USD/CHF may remain under pressure unless US data surprises. CHF strength likely to persist into early 2026.
Final Summary
Markets quietened ahead of Christmas Eve, with the Dollar under pressure despite stronger US GDP. Sterling held firm above 1.3500 on BoE’s gradual easing stance, while the Euro gained modestly on Fed–ECB divergence. The Australian Dollar rallied to 14‑month highs on RBA tightening expectations, CAD strengthened on oil gains, and CHF traded firm as USD/CHF hit multi‑month lows.