The Xe Global Currency Outlook - June 2025

As we approach the mid-point of the year, the global currency landscape continues to reflect the pressure points of trade tensions, interest rate shifts, and fiscal policy divergence. Here's what stood out in June.

USD declines as economic uncertainty and tariffs weigh heavily

The U.S. dollar has now declined 9.7% year-to-date, as tariff complexities weigh on business confidence and GDP data. While the Fed maintained that the economy is expanding at a “solid pace,” a 0.2% GDP contraction in Q1 and surging inflation expectations suggest growing uncertainty. With Moody’s recent downgrade of U.S. sovereign credit and expectations of prolonged stagflation, the USD outlook remains soft. 

Euro gains on stimulus, capital inflows, and resilience

The euro has surged 11.5% this year, bolstered by the EU’s €500bn fiscal stimulus and robust portfolio inflows. The ECB is expected to begin its rate-cutting cycle with a 25bps cut in June, but the euro continues to benefit from its role as a major alternative to the weakening USD. Lagarde acknowledged the euro’s strength as “justified,” even amid slowing inflation and wage growth. 

Sterling edges higher despite sluggish UK growth

GBP has seen more modest gains, rising 11.3% year-to-date versus the USD. The Bank of England cut rates to 4.25% in May but signaled a gradual path forward. Strong services inflation and a resilient bond market have helped support sterling, though sluggish economic data weighs on sentiment. GBP/USD touched a 3-year high of 1.3593, with continued upside risks in June. 

AUD and NZD navigate policy divergence and export trends

AUD/USD remains resilient near the 0.6450 level. Despite RBA rate cuts and mixed economic signals, the Aussie has been supported by better export performance and a mild global recovery. Meanwhile, the NZD continues to edge higher as economic data improves and the RBNZ signals a pause in rate cuts. With inflation expectations rising and producer prices surging, NZD/USD may outperform AUD/USD in the near term. 

CAD, JPY, and MXN respond to regional pressures and trade flow shifts

The CAD has appreciated despite slower growth, while JPY gains have paused amid revised BoJ forecasts and global risk sentiment. MXN has outpaced USD losses, benefiting from stable trade arrangements under the USMCA and positive growth momentum ahead of the 2026 FIFA World Cup. 

Key risks and themes to watch for the second half of 2025

• Further downside for USD if U.S. stagflation deepens. 

• Continued EUR strength tied to EU fiscal stimulus and portfolio inflows. 

• Diverging central bank paths will shape AUD/NZD and CAD/JPY trajectories. 

• Political developments and global tariff enforcement remain key volatility triggers. 

For businesses, investors, and global traders, staying informed will be critical. With the right insights, you can make strategic moves in an unpredictable market. 

Stay tuned for next month’s Global Currency Outlook as we track the latest trends shaping the FX landscape in 2025. 

The content within this blog post is not intended for use as financial advice. This content is for informational purposes only.