Friday 31st January
The British pound (GBP) traded within a narrow range on Friday, as the absence of significant UK economic data left the currency without a clear direction. Investors also appeared hesitant to make bold moves amid ongoing uncertainty surrounding the Bank of England’s (BoE) impending interest rate decision, which kept GBP activity subdued.
Meanwhile, the euro (EUR) encountered downward pressure at the close of the week, driven by Germany’s latest consumer price index report. The data revealed a more pronounced slowdown in inflation than analysts had anticipated, weighing on the single currency. Further compounding the euro’s challenges was Friday’s release of weaker-than-expected German retail sales figures, which highlighted a notable decline in consumer spending during the final months of the previous year.
In contrast, the US dollar (USD) ended the week on a strong footing. The greenback initially gained traction after President Trump reaffirmed his intention to implement tariffs on Canada and Mexico, effective Saturday. This upward momentum was bolstered by the release of the core PCE price index, the Federal Reserve’s preferred measure of inflation, which remained persistently elevated in December, reinforcing the dollar’s strength.
Thursday 30th January
The British pound (GBP) traded quietly on Thursday, as a continued lack of significant UK economic data left the currency without a clear catalyst for movement. Despite this, the pound found some underlying support from declining UK government borrowing costs and the unveiling of new pro-growth policies by Chancellor Rachel Reeves, which helped to stabilise sentiment.
The euro (EUR) experienced a volatile session, initially slipping after the Eurozone’s fourth-quarter GDP figures revealed an unexpected stagnation in the bloc’s economy at the close of last year. However, the single currency managed to recover some ground despite the European Central Bank (ECB) delivering a widely anticipated interest rate cut. The ECB’s emphasis on a data-driven approach provided some reassurance to investors, while a weakening US dollar (USD) in the afternoon further bolstered the euro’s performance.
The US dollar faced downward pressure during the afternoon as the latest US GDP data for the fourth quarter of 2024 indicated a sharper slowdown in economic growth than markets had predicted. However, the greenback staged a recovery later in the evening after President Donald Trump confirmed his plans to impose 25% tariffs on imports from Canada and Mexico, effective Saturday, reigniting demand for the currency.
Wednesday 29th January
The British pound (GBP) showed little movement on Tuesday, holding steady after UK Chancellor Rachel Reeves delivered a significant speech outlining her strategy to stimulate the nation’s economic growth. While the proposals aimed to address long-term challenges, investor sentiment appeared divided, with skepticism lingering over whether the measures would be enough to meet the government’s lofty growth objectives.
The euro (EUR) traded in a narrow range on Tuesday as market participants turned their attention to the European Central Bank’s (ECB) policy decision scheduled for later in the day. Expectations of an interest rate cut weighed on the currency, though the euro’s potential losses could be tempered by the ECB’s accompanying guidance, which will likely shape market sentiment moving forward.
The US dollar (USD) began Wednesday on a tentative footing as traders awaited the Federal Reserve’s policy update. However, the greenback regained strength later in the session after the Fed decided to maintain current interest rates while signaling a more hawkish stance on future monetary policy, reinforcing the currency’s appeal.
Tuesday 28th January
The British pound (GBP) struggled to find a clear trajectory on Wednesday, as the absence of significant UK economic data left the currency without a driving force. A shift in market sentiment toward caution caused GBP to dip slightly against safe-haven currencies, though it managed to hold its ground against riskier counterparts.
The euro (EUR) encountered some headwinds during the session, partly due to its inverse relationship with a strengthening US dollar (USD). Despite this, the euro’s status as a relatively stable currency helped it avoid significant losses, particularly when compared to more risk-sensitive assets, as investors sought safer options amid growing uncertainty.
The US dollar enjoyed robust support on Wednesday after former President Donald Trump reignited concerns about a potential trade war. Trump’s comments about imposing universal tariffs on US imports, potentially exceeding 2.5%, unsettled markets and drove investors toward the greenback as a safe-haven asset, further bolstering its strength.
Monday 27th January
The pound (GBP) started the week on a positive note, supported by optimism over the UK government’s proposed reforms to planning regulations aimed at boosting economic growth. This upward momentum persisted despite a downbeat assessment from Morgan Stanley, which lowered its 2025 UK growth forecast from 1.3% to 0.9%, citing persistent economic challenges.
The euro (EUR) edged higher on Monday, lifted by stronger-than-anticipated economic data from Germany. The IFO business climate index, a key gauge of business sentiment, unexpectedly rose, contrasting with forecasts that it would remain at levels not seen since the height of the COVID-19 pandemic. This surprising uptick provided a modest boost to the single currency.
The US dollar (USD) had a mixed performance at the beginning of the week. Early gains were wiped out after President Trump backtracked on plans to impose significant tariffs on Colombia, easing some trade-related concerns. Additionally, investor caution ahead of the Federal Reserve’s upcoming interest rate decision kept the greenback’s movements in check, as markets awaited clearer signals on the central bank’s policy direction.
Friday 24th January
The pound (GBP) gained momentum at the end of last week following stronger-than-expected UK services PMI data for December. Investors reacted to signs of rising inflationary pressures within the services industry, sparking speculation that the Bank of England (BoE) might face challenges in implementing an expected interest rate reduction next month.
The euro (EUR) saw an uptick on Friday, benefiting from its inverse relationship with the US dollar (USD) and positive economic data from the Eurozone. Preliminary PMI readings for January indicated a surprising expansion in the region’s private sector, which lifted market sentiment.
The US dollar weakened towards the end of the week after Donald Trump urged the Federal Reserve to introduce immediate rate cuts. The currency faced further losses as recent PMI reports showed a slowdown in US private sector activity, marking its lowest growth rate in nine months.
Thursday 23rd January
The pound (GBP) remained largely stable yesterday, with a lack of significant UK economic data offering little direction for Sterling. Investors appeared unfazed by downbeat figures from the Confederation of British Industry (CBI), instead opting to focus on the more influential data expected today.
The euro (EUR) faced some downward pressure as improving market sentiment reduced demand for the safer currency. Persistent speculation surrounding potential European Central Bank (ECB) interest rate cuts, combined with weak consumer confidence across the Eurozone, further weighed on the euro.
The US dollar (USD) experienced minimal movement yesterday as market turbulence following Trump’s inauguration earlier in the week gradually eased. Investors seemed to be adopting a wait-and-see approach, looking for potential policy announcements from the new US President, particularly concerning trade and fiscal strategies.
Wednesday 22nd January
The pound (GBP) struggled yesterday after the latest UK public borrowing figures revealed higher-than-expected government debt in December. The data heightened concerns among investors about the growing financial burden facing the UK, putting pressure on Sterling.
The euro (EUR) edged higher on Wednesday, benefiting from its negative correlation with the US dollar (USD). However, its upward momentum was limited following comments from European Central Bank (ECB) official Yannis Stournaras, who suggested that potential US tariffs on the Eurozone might prompt the ECB to accelerate interest rate cuts.
The US dollar lost ground during Wednesday’s trading as markets reacted positively to news that Donald Trump had postponed some of his more aggressive tariff plans. Although tariffs on China, Mexico, and Canada are still scheduled for February, they are less severe than initially anticipated, easing market concerns.
Tuesday 21st January
The pound (GBP) drifted lower yesterday after the latest labour market data painted a mixed picture of the UK economy. While wage growth met expectations, the unexpected rise in the unemployment rate from 4.3% to 4.4% sparked concerns about underlying economic stability.
The euro (EUR) gained ground against weaker currencies, despite a sharper drop in German economic sentiment than analysts had predicted. The euro’s modest gains were driven by cautious investors seeking a more stable option amid uncertainty in global markets.
The US dollar (USD) experienced fluctuations throughout yesterday’s session, initially strengthening before losing momentum later in the day. Market uncertainty followed Donald Trump’s first day in office, as he signed a series of executive orders that left investors weighing potential economic impacts.
Monday 20th January
The pound (GBP) struggled yesterday as growing expectations of a Bank of England (BoE) interest rate cut next month weighed on the currency. While speculation around rate cuts provided some stability during last week’s bond market fluctuations, improved market conditions have once again put Sterling under pressure.
The euro (EUR) strengthened on Monday, drawing support from its inverse relationship with the US dollar (USD). This upward movement occurred despite increasing speculation that the European Central Bank (ECB) may move forward with interest rate cuts in the near future.
The US dollar saw significant losses at the beginning of the week, as investors opted to secure profits ahead of Donald Trump’s inauguration. Reports suggesting a delay in planned tariff measures added to the currency’s decline, with thinner trading volumes due to the Martin Luther King Jr. Day holiday amplifying the drop.
Friday 17th January
The pound (GBP) struggled to gain traction at the end of last week as disappointing UK retail sales figures raised further concerns about the country’s economic outlook. December’s data revealed a -0.3% decline in retail sales, falling short of the anticipated 0.4% increase.
The euro (EUR) showed little movement on Friday, finding support from cautious market sentiment but facing pressure due to growing speculation about potential interest rate cuts by the European Central Bank (ECB). Minutes from the ECB’s recent meeting indicated discussions around a possible 50bps reduction, reinforcing expectations of multiple rate cuts in the near future.
The US dollar (USD) saw an initial uptick on Friday, benefiting from demand for safe-haven assets as uncertainty surrounding Donald Trump’s anticipated return to office unsettled investors. However, the dollar later weakened after comments from Federal Reserve official Christopher Waller suggested that an interest rate cut could be on the table as early as March.
Thursday 16th January
The pound (GBP) weakened yesterday following the release of the UK’s latest GDP figures, which fell short of market expectations. Despite a modest economic recovery in November, growth was recorded at just 0.1%, missing the projected 0.2%.
The euro (EUR) gained ground against some weaker counterparts, benefiting from cautious market sentiment that favoured the currency’s relative stability. However, pressure remained on the euro due to the strengthening US dollar (USD) and ongoing speculation about further interest rate cuts from the European Central Bank (ECB).
The US dollar strengthened yesterday as investors sought safer assets amid market uncertainty. However, its gains were tempered later in the day after US retail sales data for December came in below expectations, with growth slowing to 0.4%. Despite this, the dollar managed to hold onto its earlier advances.
Wednesday 15th January
The pound (GBP) strengthened yesterday after a surprising slowdown in UK inflation sparked optimism in financial markets. The unexpected dip in inflation fuelled speculation that the Bank of England (BoE) could lower interest rates as early as next month, potentially reducing government borrowing costs.
The euro (EUR) came under pressure on Wednesday following the release of Germany’s GDP data, which confirmed the economy had shrunk for the second consecutive year. The currency faced additional losses after European Central Bank (ECB) policymaker Francois Villeroy de Galhau indicated that interest rates might need to be reduced to 2% by mid-year.
The US dollar (USD) weakened on Wednesday in response to the latest inflation figures from the United States. Although headline inflation met expectations, core inflation unexpectedly fell to 3.2%. This shift prompted investors to rethink their outlook on potential interest rate cuts by the Federal Reserve, reducing demand for the dollar.
Tuesday 14th January
The pound (GBP) lost ground yesterday, even as UK bond markets remained relatively stable. While recent market volatility appeared to ease, ongoing concerns about potential spending cuts and tax increases in the UK continued to weigh on the currency.
The euro (EUR) found some support during yesterday’s session, benefiting from its inverse relationship with the US dollar (USD), which pulled back from recent highs. However, the absence of significant economic data from the Eurozone, coupled with improved market sentiment, limited further gains for the euro.
The US dollar initially strengthened during the European session, attempting to recover earlier losses as US Treasury yields edged higher. Later in the day, the dollar faced renewed pressure after US producer price inflation for December came in lower than expected, dampening demand for the currency.
Monday 13th January
The pound (GBP) struggled at the beginning of the week, slipping to new multi-month lows as rising UK borrowing costs added pressure. However, Sterling managed to recover much of its earlier losses by the end of the session as bond yields eased later in the day.
The euro (EUR) faced challenges on Monday, as strength in the US dollar (USD) weighed on the currency. Sentiment around the euro was further dampened by a weak business confidence report, which highlighted ongoing economic concerns across the Eurozone.
The US dollar (USD) continued to build momentum at the start of the week, extending gains from Friday’s strong payroll figures. The robust jobs data led investors to scale back expectations of imminent interest rate cuts from the Federal Reserve, boosting demand for the dollar.
Friday 10th January
The pound (GBP) weakened toward the end of last week as concerns over rising UK borrowing costs unsettled investors. Growing fears about the country’s fiscal outlook emerged, with speculation that higher interest payments could compel the government to increase taxes or reduce public spending, potentially harming economic growth.
The euro (EUR) faced pressure on Friday, struggling to gain traction due to its inverse relationship with the US dollar (USD), which benefited from renewed strength. Adding to the euro’s difficulties was speculation that the European Central Bank (ECB) may announce another rate cut before the month concludes.
The US dollar closed the week on a strong footing, supported by the release of robust non-farm payroll data. December’s job growth significantly surpassed expectations, with 256,000 jobs created compared to the forecast of 160,000. The impressive figures bolstered the case for the Federal Reserve to maintain its current monetary policy stance, pausing further rate cuts.
Thursday 9th January
The pound (GBP) struggled yesterday as continued selling in the UK bond market kept pressure on the currency. Investor concerns about sluggish economic growth and rising debt levels weighed heavily. Some stability returned to the gilt market later in the day, preventing further losses for Sterling, though it still ended the session lower.
The euro (EUR) showed little overall movement, trading within a narrow range amidst mixed economic reports from the Eurozone. While Germany’s trade and industrial output data exceeded expectations, disappointing Eurozone retail sales figures revealed only 0.1% growth in November. The mixed signals limited the euro’s performance, though it gained slightly against weaker currencies.
The US dollar (USD) edged higher as cautious sentiment among investors supported demand for the safe-haven currency. Despite its gains, USD traders showed restraint, holding back from making bold moves ahead of the release of key payrolls data expected today.
Wednesday 8th January
The pound (GBP) came under pressure as concerns mounted over the effect of rising UK bond yields on government finances. Investors fear that increasing borrowing costs could inflate the UK’s debt burden, potentially prompting Chancellor Rachel Reeves to consider tax hikes to comply with fiscal targets.
The euro (EUR) weakened on Wednesday following disappointing data showing a sharp drop in Germany’s factory orders for November. The figures raised alarm over the country’s industrial performance. Additionally, the euro struggled against the US dollar (USD) due to their inverse relationship but managed modest gains against more risk-sensitive currencies.
The US dollar (USD) gained significant ground yesterday following reports that Donald Trump may invoke a national economic emergency to implement tariffs on US imports. If enacted under the International Emergency Economic Powers Act (IEEPA), the move would grant broad authority to impose extensive trade restrictions, bolstering demand for the dollar.
Tuesday 7th January
The pound (GBP) remained muted yesterday, with the absence of UK economic data offering little direction for the currency. Sterling managed to hold its ground against some weaker counterparts but lost traction against stronger currencies.
The euro (EUR) edged lower as the latest Eurozone consumer price index provided little support. While December’s inflation rose from 2.2% to 2.4% as anticipated, it failed to impress investors following Monday’s unexpectedly high German inflation figures, leaving the euro under pressure.
The US dollar (USD) saw early losses yesterday, influenced by a risk-on market sentiment and optimism that Donald Trump might avoid introducing extensive trade tariffs after taking office later this month. However, the dollar regained strength later in the day, bolstered by a better-than-expected ISM services PMI, which highlighted robust expansion in activity last month.
Monday 6th January
The pound (GBP) lacked clear direction after the UK’s latest services PMI report was published. December’s finalised reading came in lower than initially estimated, deepening worries about the precarious state of the UK economy.
The euro (EUR) received a boost on Monday as Germany’s consumer price index revealed a sharper-than-expected rise in December inflation. The surprising uptick dampened expectations for imminent European Central Bank (ECB) rate cuts. However, lingering speculation about a potential rate reduction in January limited the euro’s upward momentum.
The US dollar (USD) faltered at the start of the week following reports that Donald Trump’s economic team might adopt a more targeted approach to tariffs, diverging from his earlier promises. Although Trump later dismissed the claims, the news weakened the dollar, which had previously been supported by hopes that sweeping tariffs could drive inflation higher and reduce the odds of further Federal Reserve rate cuts.
Currency Ranges for the month:
GBP/USD: Low: 1.21071 High: 1.25642
GBP/EUR: Low: 1.17846 High: 1.20737
EUR/USD: Low: 1.01936 High: 1.05234