Pound (GBP) steady as BoE decision looms
The pound (GBP) remained rangebound on Friday, with a continued lack of UK economic releases prompting GBP traders to look ahead to the Bank of England’s (BoE) interest rate announcement later this week.
Although policymakers are widely expected to keep rates unchanged, investors remain alert to the BoE’s guidance and whether it hints at a possible rate cut as early as March.
In the meantime, confirmation that UK manufacturing growth picked up pace in January could help underpin Sterling at the start of this week.
Euro (EUR) pressured by firmer USD
The euro (EUR) edged lower at the end of last week, dragged down by its strong inverse relationship with the US dollar (USD).
This overshadowed the Eurozone’s latest GDP figures, which showed the bloc’s economy expanded by 0.3% in the final quarter of 2025, outperforming expectations for a slowdown to 0.2%.
European trade opened this week with an unexpected rebound in German retail sales, which could offer the euro some support this morning.
US dollar (USD) supported by optimism over Trump’s Fed nominee
The US dollar finished last week on a positive footing after President Donald Trump confirmed Kevin Warsh as his nominee for the next Federal Reserve Chair.
A former Fed Governor, Warsh is viewed as the most credible and least dovish option from Trump’s shortlist, with markets hopeful his appointment will help safeguard the Fed’s independence.
Looking ahead, the latest ISM manufacturing PMI could extend the dollar’s rebound into this week if it signals improved conditions in the US factory sector last month.
Canadian dollar (CAD) subdued as growth stalls
The Canadian dollar (CAD) struggled to gain traction on Friday after data revealed that Canada’s economy flatlined in November.
Today, movements in the ‘loonie’ are likely to be dictated by oil price action, potentially leaving CAD exposed to further downside as crude prices slide.
Australian dollar (AUD) slips amid commodity selloff
The Australian dollar (AUD) begins the week on the back foot, weighed down by sharp declines across key commodity markets.
New Zealand dollar (NZD) weakened by cautious sentiment
The New Zealand dollar (NZD) also retreated during Monday’s Asian session as a wary market mood dampened demand for the risk-sensitive ‘kiwi’.
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