Pound (GBP) pressured by surge in UK borrowing costs
The pound (GBP) opened the week on the back foot as mounting inflation concerns tied to soaring energy prices pushed UK government borrowing costs sharply higher.
As markets rapidly scaled back expectations for a Bank of England (BoE) interest rate cut this year, two-year gilt yields recorded their steepest increase since the turmoil sparked by Liz Truss’s mini-budget in 2022.
With no major UK data releases scheduled, movements in Sterling today are likely to be shaped by any policy response from the government to rising energy costs, as well as broader shifts in market sentiment.
Euro (EUR) weakens following poor German industrial data
The euro (EUR) lost ground during Monday’s trading after new figures from Germany showed declines in both factory orders and industrial output at the beginning of 2026.
The disappointing releases added to existing pressure on the single currency, which had already been unsettled by the recent spike in oil prices and renewed anxiety over Europe’s energy outlook.
Later today, the euro could encounter additional pressure after Germany’s latest trade report revealed exports dropped more sharply than analysts had expected in January.
US dollar (USD) surrenders early gains after Trump comments
The US dollar (USD) initially strengthened at the start of the week as investors sought the safety of the world’s reserve currency amid heightened volatility driven by rising energy prices.
However, much of this momentum faded by the close of the session after US President Donald Trump suggested during a press briefing that the conflict with Iran may conclude ‘fairly quickly’.
If expectations of de-escalation in the Middle East continue to grow, the US dollar could face further selling pressure through today’s trading.
Canadian dollar (CAD) swings with oil market volatility
The Canadian dollar (CAD) began the week on solid footing as surging oil prices supported the commodity-linked currency.
Nevertheless, those gains proved short-lived as crude prices later retreated, prompting the ‘loonie’ to give back much of its earlier strength.
Given Canada’s close link to the energy sector, the currency is expected to remain highly sensitive to further movements in oil markets today.
Australian dollar (AUD) lifted by stronger consumer sentiment
The Australian dollar (AUD) advanced during the Asian session, underpinned by improving risk appetite and a better-than-expected rise in domestic consumer confidence for the month.
New Zealand dollar (NZD) edges higher on improving market mood
The New Zealand dollar (NZD) also posted modest gains overnight as investors reacted positively to growing optimism that tensions in the Middle East may ease.
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