01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 25th June 2025
GBP/EUR
Summary: GBP/EUR edged higher to around 1.1730 as the Euro weakened following dovish remarks from ECB officials. Francois Villeroy de Galhau suggested further rate cuts remain possible despite oil market volatility, while Philip Lane highlighted downside risks to growth and inflation. The Pound found modest support from stronger UK PMI data, though BoE Governor Bailey acknowledged signs of labour market softening.
Outlook: If ECB rhetoric remains dovish and UK data holds firm, GBP/EUR could maintain upward momentum. However, any signs of Eurozone resilience may cap gains.
GBP/USD
Summary: GBP/USD held firm above 1.3600 after touching a three-year high near 1.3650 on Tuesday. The Pound was buoyed by easing geopolitical tensions and upbeat UK services PMI data. Meanwhile, the US Dollar stabilised as Fed Chair Powell reiterated a cautious stance, noting the need for more time to assess tariff-driven inflation.
Outlook: Powell’s testimony today and US housing data will be key. If the Fed maintains a patient tone and risk appetite persists, GBP/USD may attempt to retest recent highs.
EUR/USD
Summary: EUR/USD hovered near 1.1600 after a modest pullback from Tuesday’s gains. The Euro remains supported by reduced geopolitical risk and a weaker Dollar, though ECB officials’ dovish tone has tempered upside. Lagarde’s upcoming remarks will be closely watched for further policy clues.
Outlook: If Lagarde signals caution and US data disappoints, EUR/USD could resume its climb. However, any hawkish shift from the Fed may limit further gains.
USD/AUD
Summary: AUD/USD extended its rally above 0.6550, supported by improved risk sentiment and softer US Dollar demand. Australia’s May CPI came in below expectations at 2.1% YoY, reinforcing expectations of a July RBA rate cut. Despite this, the Aussie gained on the back of the Israel-Iran ceasefire and stronger services PMI data.
Outlook: The pair may remain supported if Powell maintains a dovish tone. However, any renewed geopolitical tension or weak Chinese data could weigh on AUD.
USD/CAD
Summary: USD/CAD traded near 1.3725, little changed after Tuesday’s recovery. Canadian CPI held steady at 1.7% YoY in May, in line with expectations. Oil prices remain subdued following the ceasefire, limiting CAD’s upside. The Dollar found some support from Powell’s cautious remarks.
Outlook: The pair may remain range-bound ahead of further US data. A dovish Fed and stable oil prices could favour CAD modestly.
USD/CHF
Summary: USD/CHF hovered near 0.8050, its lowest level since 2011, as the Swiss Franc remained supported by safe-haven flows. The Swiss ZEW Expectations index improved to -2.1 in June, while the Dollar struggled amid easing geopolitical tensions and dovish Fed expectations.
Outlook: If Powell reinforces a patient stance and risk appetite holds, USD/CHF may remain under pressure. However, any signs of renewed tension could limit CHF gains.
Final Summary
Currency markets are consolidating after Tuesday’s risk rally, with the US Dollar stabilising ahead of Powell’s second day of testimony. The Pound remains firm on improved UK data, while the Euro is weighed by dovish ECB commentary. Commodity-linked currencies like the Aussie and Loonie are supported by risk-on sentiment, though soft inflation data and oil prices limit upside. The Swiss Franc continues to benefit from safe-haven demand, keeping USD/CHF near multi-year lows.