Pound (GBP) pressured by by-election fallout
The pound (GBP) ended last week on weaker footing as renewed political uncertainty weighed on market sentiment toward the UK currency.
Labour’s defeat in the Gorton and Denton by-election reignited speculation surrounding Keir Starmer’s authority within the party and the longer-term stability of his premiership.
GBP investors may look to comments from Bank of England (BoE) policymaker Alan Taylor for direction today. As one of the Monetary Policy Committee’s more dovish voices, any cautious rhetoric could act as a drag on Sterling.
Euro (EUR) edges higher despite softer German inflation
The euro (EUR) strengthened modestly on Friday, with investors largely brushing aside Germany’s latest inflation release.
Although consumer price growth cooled more sharply than forecast last month, it failed to materially alter expectations for the European Central Bank’s (ECB) monetary policy outlook.
However, Germany’s latest retail sales figures may weigh on the euro today after data revealed a steeper-than-expected drop in household spending at the beginning of the year.
US dollar (USD) supported by upbeat PPI reading
The US dollar (USD) advanced toward the end of last week after US producer price inflation exceeded expectations in January, rising from 0.4% to 0.5% rather than easing to 0.3% as predicted.
Stronger factory-gate inflation reinforced market expectations that the Federal Reserve may maintain higher interest rates for longer, lending support to USD.
At the start of this week, escalating geopolitical tensions following US-led strikes on Iran may further enhance the US dollar’s appeal as a safe-haven currency.
Canadian dollar (CAD) weakened by soft GDP data
The Canadian dollar (CAD) moved lower on Friday after Canada’s latest GDP report showed the economy contracted by 0.2% in the final quarter of 2025.
Looking ahead, a sharp rebound in oil prices amid heightened Middle East tensions over the weekend could help support the commodity-linked ‘loonie’ during today’s session.
Australian dollar (AUD) swings amid geopolitical tensions
The Australian dollar (AUD) experienced volatile movement during Monday’s Asian session, initially falling as risk aversion surged following US and Israeli strikes on Iran before recovering much of its losses ahead of European trading.
New Zealand dollar (NZD) flucuates amid Middle East concerns
The New Zealand dollar (NZD) also saw choppy trading overnight as market nerves surrounding developments in the Middle East drove volatility.
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