30/09/2025
Written by: Ian Morley
Daily Currency Market Update – 28th August 2025
GBP/EUR
Summary: GBP/EUR tests 1.16 as the Euro softens amid mounting French political uncertainty. Opposition parties are preparing to vote down PM Bayrou, raising fears of instability. Meanwhile, BoE’s Mann reinforced the case for holding rates steady, citing persistent inflation.
Outlook: Sterling may remain supported if BoE rhetoric continues to push back against rate cut expectations. Euro sentiment is likely to stay fragile until clarity emerges on France’s fiscal direction and coalition stability.
GBP/USD
Summary: GBP/USD trades around 1.3460, supported by hawkish BoE commentary and cautious Fed positioning. Pill’s inflation warning helped offset recent UK retail softness, while the Dollar remains steady ahead of PCE inflation data.
Outlook: GBP/USD may drift higher if US inflation prints soft and BoE signals persist. However, Fed credibility concerns and political noise could inject volatility.
EUR/USD
Summary: EUR/USD dips to 1.1605 as the Euro struggles under French political uncertainty and weak consumer sentiment. The Dollar remains firm, with markets awaiting PCE inflation and further Fed commentary following Governor Cook’s dismissal.
Outlook: Euro downside risk remains elevated unless French political tensions ease. US data and ECB minutes will be key for near-term direction.
USD/AUD
Summary: AUD/USD trades near 0.6460, pressured by risk aversion and Trump’s renewed tariff threats on China. Australian retail sales fell 0.4% m/m, while inflation expectations ticked up to 4.1%, complicating the RBA’s policy outlook.
Outlook: AUD may remain under pressure unless Chinese trade sentiment improves. Domestic inflation signals and global risk appetite will guide direction.
USD/CAD
Summary: USD/CAD holds firm at 1.3865, supported by broad Dollar strength and soft Canadian data. Industrial Product Prices fell 0.3% m/m, while Raw Materials Prices dropped 1.1%, reinforcing expectations for BoC easing.
Outlook: Canadian GDP on Friday will be pivotal. If growth disappoints and Fed signals caution, USD/CAD may extend gains.
USD/CHF
Summary: USD/CHF consolidates near 0.8055, with the Franc steady ahead of Swiss GDP and trade data. The Dollar remains supported by Fed uncertainty and cautious risk sentiment, while SNB easing expectations persist.
Outlook: If Swiss data underwhelms and Fed rhetoric remains balanced, USD/CHF may stay elevated. Political developments and inflation signals will shape direction.
Final Summary
Sterling finds support from hawkish BoE commentary, while the Euro weakens on French political instability. The US Dollar remains firm ahead of key inflation data, with Fed credibility concerns still simmering. Commodity-linked currencies like the Aussie and Loonie face pressure from soft domestic data and global trade tensions. The Swiss Franc trades cautiously ahead of growth figures and SNB policy signals. Market focus now turns to PCE inflation, Swiss GDP, and Canadian growth data for fresh momentum.