The dollar found relative stability last week after a stronger than expected US jobs data print. Data releases this week will be the difference for our major currencies.
Sterling steadied following political pressure last week, but expectations of a March BoE cut – with inflation data pivotal – keep it vulnerable. Meanwhile, the euro remains largely guided by dollar moves and upcoming PMI data, leaving all three pairs sensitive to any shift in policy outlook.
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Current rates
| Currency pair | Rate |
|---|---|
| gbp usd | 1.3645 |
| eur usd | 1.1855 |
| gbp eur | 1.1509 |
Rates correct as of 12:30pm on Monday 16 February 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.
Strong US jobs data caps sterling gains
GBP/USD traded with a modest downside bias as a stronger-than-expected US Non-Farm Payrolls print reinforced expectations that Fed rate cuts may be pushed back, lending support to the dollar. Sticky core price pressures keep the Fed in patient mode. Sterling remains vulnerable amid lingering political uncertainty and growing speculation that the Bank of England could cut as soon as March, particularly with sluggish UK growth and inflation expected to ease. There’s plenty of UK and US data to follow, so rate divergence and positioning dynamics will be central to GBP/USD movement.
PMI data in focus as EUR/USD awaits fresh catalyst
EUR/USD traded in a tighter range, with gains capped near technical resistance due to the data induced dollar support mentioned above. However, softer inflation and a lack of conviction behind dollar rallies suggest upside momentum remains limited. With eurozone data sparse and the ECB signalling comfort with current policy, the pair continues to take its cues from US developments. Attention now turns to core PCE and PMI data, where further dollar resilience could trigger short covering. For now, the broader bias still favours gradual EUR/USD upside unless US data materially surprises.
BoE cut expectations keep GBP/EUR rangebound
GBP/EUR held key technical support as trepidation over Kier Starmer’s position eased slightly, reducing immediate pressure on sterling. However, markets continue to price a strong probability of a March BoE rate cut, keeping policy divergence with a steady ECB in focus. This week’s UK inflation print is pivotal. A drop towards 3% would cement easing expectations, while any upside surprise could offer sterling near-term relief. PMI releases on both sides will help shape sentiment, but the pair looks set to remain rangebound for now.
Looking forward
Key dates for your calendar.
- Monday: Japan GDP. US markets closed for Presidents’ Day.
- Tuesday: Canada CPI. UK unemployment rate. RBA meeting. Euro Economic Sentiment.
- Wednesday: FOMC meeting minutes. US Housing Starts and Building Permits. France and UK CPI.
- Thursday: Japan CPI.
- Friday: UK Retail sales, Services and Manufacturing PMI. German HCOB Manufacturing PMI. US personal income, PCE, GDP and new home sales.
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:
- UK and US PMI data this week
- Unstable UK political environment
- Russia/Ukraine peace talks
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.