A very Happy New Year to you and welcome to the first Weekly Market Update of the year. Read on for more and head to our subscribe page to receive the full reports in your inbox each week.
There is no shortage of geopolitical news to start the year but market reaction to US activity in Venezuela remains to be seen. Sterling is supported by a firm risk backdrop and patient BoE expectations, while euro direction hinges on inflation data and ECB resolve. For the dollar, a heavy U.S. data calendar and Friday’s jobs report remain the key swing factor for near-term moves.
Current rates
| Currency pair | Rate |
|---|---|
| gbp usd | 1.3466 |
| eur usd | 1.1684 |
| gbp eur | 1.1524 |
Rates correct as of 11:40pm on Monday 5 January but may now have changed.
The Big 3
A deeper look at the performance of major currency pairs this week. Become a subscriber to receive the full reports.
Dollar direction hinges on key US data releases
GBP/USD starts the year holding a firm technical uptrend, with sterling supported by a light UK data calendar and a broadly positive risk backdrop. With little domestic data to drive direction, focus shifts to the dollar, where a packed U.S. schedule, culminating in Friday’s Non-Farm Payrolls, is set to dictate near-term moves. After a difficult 2025 for the greenback, early-year volatility looks likely as markets test Fed rate-cut expectations, leaving GBP/USD sensitive to U.S. data shifts, risk sentiment and any escalation in Venezuela.
Euro sensitive to inflation and dollar risk this week
EUR/USD has eased back recently, with a firmer dollar partly linked to geopolitical developments and a return of liquidity after year end. Attention now turns to eurozone inflation, which could reinforce the ECB’s hawkish-leaning narrative if it meets or exceeds expectations, also helping the euro to stabilise. Beyond that, direction will be shaped by a heavy U.S. data calendar, particularly on Friday. Can the dollar extend gains or will the euro be bolstered?
GBP/EUR pushes higher following BoE patience and risk sentiment
GBP/EUR has started the year on a firmer footing after failing to make new lows at year end, with sterling supported by a light UK data calendar, a resilient risk backdrop and expectations of greater patience from the BoE on further rate cuts. Focus here turns to eurozone inflation on Wednesday, which will be key in determining whether the euro can regain momentum. Read on for more detail.
Looking forward
Key dates for your calendar.
- Monday: 🇺🇸 ISM Manufacturing PMI
- Tuesday: 🇪🇺 German Inflation Rate YoY
- Wednesday: 🇺🇸 JOLTs Job Openings, ISM Services PMI 🇪🇺 Inflation Rate Flash
- Thursday: 🇦🇺 Balance of Trade 🇯🇵 Consumer Confidence
- Friday: 🇺🇸 Jobs and unemployment data 🇨🇳 Inflation Rate 🇪🇺 Balance of trade
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- New year market volatility.
- GBP performance in lieu of data.
- Likely 2026 interest rate moves.
The contents of this article do not constitute financial advice and are provided for general information purposes only. While the content is based on information believed to be accurate at the time of publication, no guarantee is provided.