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After treading water against the US dollar and euro last week as the febrile atmosphere at Westminster calmed, somewhat, this is the week when economics comes back in force. From tomorrow, every day has something meaty for the markets to chew on, starting with unemployment and earnings.
In Washington, the markets may be closed today (for Presidents’ Day) but the row between the White House and the Federal Reserve is still hanging over. Central bank independence is one of those boring-sounding things that matters a lot when it’s tested. It’s been a nagging worry for the dollar, even when the day-to-day data looks fine, with non-farm payrolls much better than expected and inflation down to 2.4%
Back home, the sense of a beleaguered government has kept sterling traders cautious. The week certainly ended better for the prime minister, but you know what they say about weeks and politics – the story may return at any time.
Last Thursday’s UK GDP number was anaemic to say the least, at 0.1% for the last quarter of 2025. The economy avoided anything dramatic, but it hardly shouted momentum.
So, after a week where sterling and the euro mostly traded in tight ranges, the next push is likely to come from the scheduled releases. The ONS has a busy run this week, and it lands right as markets are deciding whether 2026 is finally the year growth and inflation move back into something like a normal rhythm.
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GBP: Economic indicators to point direction
Sterling ended last week relatively unmoved against both the US dollar and the euro. It looks like a currency waiting for a reason to pick a direction, and that may come soon. The Office for National Statistics (ONS) has labour-market updates tomorrow, inflation on Wednesday, then retail sales and the public finances on Friday. After this month’s close decision from the Bank of England, a cut next month is largely expected but the economic indicators complicate the picture.
GBP/USD past year
EUR: Euro looks for sentiment boost
The euro has remained composed while politics and economic credibility have strained other currencies. Will the data keep on validating the idea of a slow, controlled path for interest rates? Tomorrow we’ll have the influential ZEW Economic Sentiment Index for both Germany and the wider eurozone. A strong boost in optimism is expected.
GBP/EUR past year
USD: Markets closed for Presidents’ Day
America is having one of those public holidays that crop up at strange times, this time for George Washington’s birthday. The big event this week is the release of the minutes of the US Federal Reserve’s monetary policy committee meeting on Wednesday, with the FOMC under huge political pressure to cut rates.
USD/GBP past year
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