01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 28th July 2025
GBP/EUR
Summary: GBP/EUR rebounded to 1.1460 after briefly dipping to 1.1420, as confirmation of a US–EU trade deal lifted risk sentiment and supported the Pound. The agreement sets a blanket 15% tariff on transatlantic goods, easing fears of a broader trade war. However, Sterling remains weighed down by expectations of a BoE rate cut next week and soft UK labour market data.
Outlook: Eurozone HICP and GDP figures will be pivotal this week. If UK fiscal concerns persist and ECB policy remains steady, GBP/EUR may struggle to hold gains.
GBP/USD
Summary: GBP/USD fell toward 1.3400 as the Dollar strengthened following the US–EU trade agreement. The deal boosted demand for the Greenback, while Sterling was pressured by dovish BoE expectations and weak UK employment data. Markets now await Wednesday’s Fed decision, with rates expected to remain unchanged.
Outlook: If Fed Chair Powell signals caution on inflation and tariffs, GBP/USD could remain under pressure. UK data and global trade developments will also influence direction.
EUR/USD
Summary: EUR/USD declined below 1.1700 as the Dollar extended gains on trade optimism and solid US data. The Euro was unable to hold early gains despite the EU’s $600 billion investment pledge and increased US energy purchases. ECB’s steady policy stance and cautious tone have limited upside.
Outlook: Eurozone inflation and GDP data will guide sentiment. If US growth remains firm and trade flows stabilise, EUR/USD may remain on the defensive.
USD/AUD
Summary: AUD/USD dropped below 0.6550, pressured by broad Dollar strength and caution ahead of US–China trade talks. Despite expectations of a 90-day tariff truce extension, the Aussie struggled amid weak Chinese retail sales and RBA easing expectations.
Outlook: Australian CPI on Wednesday will be key. If inflation softens and trade sentiment remains fragile, AUD/USD may extend losses.
USD/CAD
Summary: USD/CAD trades near 1.3700, subdued after Friday’s rally. The US–EU trade deal improved sentiment, but Trump’s comments suggest no deal with Canada before the 1st August deadline. Canadian Retail Sales fell 1.1% in May, reinforcing downside risks for the Loonie.
Outlook: Fed policy signals and Canadian GDP data will be pivotal. If trade tensions escalate and oil prices remain soft, USD/CAD could retest recent highs.
USD/CHF
Summary: USD/CHF holds steady near 0.7950, with safe-haven demand for the Swiss Franc easing slightly on improved risk appetite. However, geopolitical uncertainty and Fed leadership speculation continue to support CHF.
Outlook: If US–China talks progress and Fed signals dovish intent, USD/CHF may remain range-bound. Any escalation in global tensions could revive demand for the Franc.
Final Summary
Markets opened the week on a risk-positive note following confirmation of a US–EU trade deal, lifting the Dollar and easing global uncertainty. Sterling remains under pressure from soft UK data and BoE rate cut expectations, while the Euro struggles to hold ground despite investment pledges. Commodity-linked currencies like the Aussie and Loonie are mixed, and the Swiss Franc consolidates as safe-haven flows ease.