01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 26th June 2025
GBP/EUR
Summary: GBP/EUR holds near 1.1730 as the Pound remains supported by stronger UK PMI data, while the Euro softens following dovish ECB commentary. ECB officials, including Villeroy and Lane, flagged downside risks to growth and inflation, reinforcing expectations of further easing. Meanwhile, BoE Governor Bailey acknowledged labour market softening, but upbeat services activity continues to underpin Sterling.
Outlook: If Bailey maintains a cautious tone in today’s speech and ECB officials remain dovish, GBP/EUR could remain range-bound with a slight upside bias.
GBP/USD
Summary: GBP/USD trades above 1.3700, reaching its highest level since January 2022, as the US Dollar slumps to a three-year low. The Greenback weakened after President Trump signalled he may replace Fed Chair Powell before his term ends, raising concerns over central bank independence. Sterling remains firm despite labour market concerns, supported by resilient business activity.
Outlook: Market focus turns to US Durable Goods and Jobless Claims data. If US figures disappoint and Fed uncertainty persists, GBP/USD could extend gains toward 1.3750.
EUR/USD
Summary: EUR/USD climbs above 1.1700, its highest since September 2021, as the Dollar continues to weaken. Trump’s criticism of Powell and speculation over his successor have undermined confidence in the Fed’s autonomy. Despite mixed Eurozone data, the Euro benefits from the policy divergence between the ECB and Fed.
Outlook: If US data remains soft and ECB officials avoid signalling imminent cuts, EUR/USD may attempt to test the 1.1750 level.
USD/AUD
Summary: AUD/USD extends its rally above 0.6500, supported by improved risk sentiment and a weaker US Dollar. Australian job vacancies rose 2.9% in the three months to May, while softer CPI data reinforced expectations of a July RBA rate cut. The ceasefire between Israel and Iran and stable Chinese data have also helped lift the Aussie.
Outlook: The pair may remain supported if US data underwhelms and Fed rhetoric stays dovish. However, any signs of renewed geopolitical tension could cap gains.
USD/CAD
Summary: USD/CAD trades near 1.3720 as the Loonie holds firm despite falling oil prices. The Canadian Dollar is supported by expectations for stable inflation, with April GDP data due Friday. Meanwhile, the US Dollar remains under pressure from Fed uncertainty and geopolitical developments.
Outlook: Canadian GDP and US PCE inflation data later this week will be key. If Canadian growth surprises to the upside, USD/CAD could drift lower.
USD/CHF
Summary: USD/CHF hovers near 0.8025, its lowest since 2011, as the Dollar remains under pressure. Concerns over Fed independence and expectations of rate cuts continue to weigh on the Greenback. The Swiss Franc remains supported by safe-haven demand, though the Israel-Iran ceasefire has tempered risk aversion.
Outlook: If US data disappoints and Fed officials maintain a dovish tone, USD/CHF could test fresh multi-year lows. Any escalation in geopolitical tensions may reinforce CHF strength.
Final Summary
The US Dollar remains under broad pressure amid concerns over Fed independence and growing expectations of rate cuts. Sterling holds firm on resilient PMI data, while the Euro benefits from policy divergence with the Fed. Commodity-linked currencies like the Aussie and Loonie are supported by improved sentiment, though oil and inflation data remain key. The Swiss Franc continues to attract safe-haven flows, keeping USD/CHF near historic lows. Traders now turn to US macro data and central bank commentary for the next directional cues.