Pound (GBP) supported as markets pare back BoE rate cut expectations
The pound (GBP) traded with modest support on Friday as investors continued to dial back expectations for monetary easing from the Bank of England (BoE) this year.
With inflation risks building, expectations for rate reductions have continued to decline, with markets no longer anticipating two 25bps interest rate cuts before the end of 2026.
With no major UK data releases scheduled, the pound will likely take its cue from broader market developments throughout Monday’s trading session.
Euro (EUR) weakens after GDP revision
The euro (EUR) finished last week on the back foot after the Eurozone’s latest GDP estimate for the final quarter of 2025 was revised down from 0.3% to 0.2%.
Downward pressure on the single currency was then compounded by concerns that rising energy costs could restrict Eurozone growth at the start of 2026.
Germany released its latest factory orders and industrial production data at the start of today’s session, with the euro vulnerable to losses after they reported a sluggish start to the year for the nation’s key manufacturing sector.
US dollar (USD) gains despite payroll disappointment
The US dollar (USD) initially moved higher on Friday as the ongoing conflict in the Middle East, along with surging energy prices, continued to support demand for the safe-haven currency.
However, the ‘greenback’ eventually ended the session on weaker footing after the latest US non-farm payrolls report showed the economy unexpectedly lost 92,000 jobs last month.
As tensions in the Middle East intensify and oil prices move beyond $100 a barrel, demand for the US dollar could strengthen again at the start of this week.
Canadian dollar (CAD) lifted as oil prices extend gains
The Canadian dollar (CAD) remained well supported at the end of last week as climbing oil prices and stronger-than-forecast domestic PMI figures reinforced demand for the commodity-linked currency.
The ‘loonie’ may continue to hold its upward momentum early this week if oil prices maintain their current rally.
Australian dollar (AUD) drops amid risk-off mood
The Australian dollar (AUD) declined during Monday’s Asian trading session as the conflict in the Middle East continued to unsettle global markets.
New Zealand dollar (NZD) weighed on by cautious sentiment
The New Zealand dollar (NZD) also came under pressure in overnight trading as soaring oil prices and geopolitical tensions dampened overall market risk appetite.
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