01/10/2025
Written by: Ian Morley
Daily Currency Market Update – 31st July 2025
GBP/EUR
Summary: GBP/EUR slipped to 1.1580 this morning after breaking above 1.16 yesterday as traders priced in a Bank of England rate cut next week, following a string of weaker UK data. The Euro gained modestly after Eurozone GDP rose 0.1% QoQ in Q2, beating expectations. Focus is now on Friday’s HICP inflation print, which could influence ECB policy expectations.
Outlook: If Eurozone inflation surprises to the upside and UK fiscal concerns persist, GBP/EUR may remain under pressure. A dovish BoE tone next week could reinforce downside risks.
GBP/USD
Summary: GBP/USD rebounded to near 1.3270 after hitting a two-month low, as the US Dollar paused its rally following five days of gains. Sterling found support from short-covering, though the broader outlook remains bearish amid expectations of BoE easing and soft UK labour data.
Outlook: US PCE inflation and Friday’s Nonfarm Payrolls will be pivotal. If US data remains firm and Fed rhetoric stays hawkish, GBP/USD could resume its decline.
EUR/USD
Summary: EUR/USD recovered to 1.1450 after testing 1.1400, supported by stronger Eurozone GDP and a temporary pause in Dollar strength. However, the pair remains vulnerable as traders pare Fed rate cut bets and await Eurozone HICP data.
Outlook: If inflation data disappoints and US labour figures impress, EUR/USD may retest recent lows. A dovish ECB tone could add further pressure.
USD/AUD
Summary: AUD/USD steadied near 0.6550 after Australian Retail Sales rose 1.2% MoM in June, beating expectations. However, weak Chinese PMI data and lingering RBA easing expectations capped gains. The Aussie remains sensitive to risk sentiment and China’s growth outlook.
Outlook: If US data strengthens and Chinese momentum falters, AUD/USD may drift lower. RBA commentary and tariff developments will also be key.
USD/CAD
Summary: USD/CAD holds above 1.3815 after five consecutive days of gains, supported by strong US GDP and employment data. The BoC kept rates steady but hinted at possible easing, adding pressure to the Loonie. The market now awaits US PCE inflation for confirmation of Fed policy direction.
Outlook: If US inflation proves sticky and Canadian data softens, USD/CAD could extend gains. Oil price trends and trade headlines remain influential.
USD/CHF
Summary: USD/CHF dipped to 0.8125 as safe-haven demand for the Swiss Franc intensified ahead of Trump’s tariff deadline. Despite the Fed’s hawkish tone, geopolitical uncertainty and trade tensions continue to support CHF.
Outlook: If risk aversion deepens and Fed signals caution, USD/CHF may test support near 0.8100. Swiss data and US employment figures will guide direction.
Final Summary
Sterling remains under pressure amid expectations of BoE easing, while the Euro finds support from stronger GDP but faces inflation risks. The US Dollar paused its rally after robust data and a hawkish Fed tone, with the market now focused on PCE inflation and Nonfarm Payrolls. Commodity-linked currencies like the Aussie and Loonie are mixed, and the Swiss Franc continues to attract safe-haven flows. Market attention turns to key inflation and labour data for fresh momentum.