By Ashley Finill
Last week was a bit of a mixed one for Sterling against both the euro and the US dollar. The pound started off the week well and reached a 3 month high on the Euro, and at the opening of the market on Monday morning saw a 4 month high on USD. However, as the week progressed Sterling’s rally started to reverse and dropped off against both majors losing around half a cent on the euro and well over a cent on the Dollar, with the dollar being the strongest to end out the week against both the pound and the Euro. It’s not all bad for Sterling though as positivity is showing. This could be down to the UK economy showing signs of picking up with inflation falling at the end of 2025 and political tensions in the UK settling post budget. Being a new year and month there are new data releases which will give an insight to how global economies are faring and are likely to continue to dictate markets movements. A key event for the pound will be what the Bank of England will look to do at their next meeting next month on the 5th of February and if they will cut interest rates again after their last meeting in December where they cut by 0.25%, or whether they go for a more cautious approach going into 2026. The inflation figure will influence their decision which is due out on January 21st. As already mentioned, the pound finds itself in a comfortable position for now but as we have seen many times before, sometimes the highs aren’t around for long, especially when uncertainty looms whether it be economic or political. Should you have a requirement for Euros and don’t like to take too much of a risk then speak to your currency consultant today, we have options in place that can mitigate your risk against the currency market and make your money go further.
The Week Ahead
As we head into the second week of 2026 there is a raft of data due to be release which will almost certainly affect the markets this week. A quiet start on Monday with little to note but on Tuesday, the UK post unemployment at 7am, in the afternoon the US post their inflation figure which is expected to stay at last month’s reading of 2.7%, this could be a market mover in Tuesday’s afternoon trading should that be different. On to Wednesday, The US post retail sales at 1.30pm, an improvement of 0.4% is expected from last month’s reading of 0%. Across Wednesday afternoon there are various speeches from Federal Reserve members, Paulson, Miran, Ramsden, Bostic, Kashkari and Williams. On Thursday, early hours, unemployment in the Australia is posted. At 7am, the UK post GDP which is expected to improve from last month’s figure of -0.1% to 0%, if there is a further contraction then we can expect some weakness for sterling early doors. On to Thursday afternoon in the US who post Initial jobless claims. Ending the week on Friday, Germany post Index of consumer prices at 7am and finishing with the US as they posy industrial production figures at 2.15pm.