Pound (GBP) drops as UK growth falters
The pound (GBP) ended last week’s session on a weaker footing after the UK’s latest GDP release showed the economy made a sluggish start to 2026.
Data from the Office for National Statistics (ONS) showed economic output unexpectedly flatlined in January, fuelling broader concerns about the UK’s growth outlook against the current inflationary backdrop.
Looking ahead, the UK economic calendar remains relatively quiet until later in the week, leaving Sterling likely to take its cues from broader market developments today.
Euro (EUR) subdued amid energy market concerns
The euro (EUR) traded without clear direction on Friday as persistent uncertainty over rising energy costs continued to weigh on the Eurozone’s economic outlook.
These concerns were reinforced by the bloc’s latest industrial production report, which indicated factory activity had already been weakening even before the risk of higher energy input costs.
If energy prices remain elevated and investors continue to favour the US dollar (USD), the euro may stay under pressure at the beginning of this week.
US dollar (USD) supported by ongoing geopolitical tensions
The US dollar (USD) continued to outperform most of its peers toward the end of last week as heightened Middle East tensions sustained demand for safe-haven assets.
However, some of the ‘greenback’s’ gains were limited after the latest US GDP figures revised growth lower to just 0.7% in the final quarter of 2025.
At the start of this week, activity in the US dollar may remain elevated as the conflict in the Middle East enters its third consecutive week.
Canadian dollar (CAD) pressured by rising joblessness
The Canadian dollar (CAD) encountered headwinds on Friday after Canada reported a larger-than-expected increase in unemployment in the previous month.
Canada will release its latest consumer price index early this week, with signs of persistent inflation potentially helping to revive demand for the ‘loonie’.
Australian dollar (AUD) gains on Hormuz developments
The Australian dollar (AUD) moved higher during Monday’s Asian trading session, supported by optimism surrounding reports that a coalition of countries could deploy naval forces to safeguard shipping routes through the Strait of Hormuz.
New Zealand dollar (NZD) advances on improving sentiment
The New Zealand dollar (NZD) also climbed in overnight trade as cautious optimism surrounding plans to reopen the Strait of Hormuz lifted overall market sentiment.
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