Currency forecast: January to March

Download our January to March Quarterly Forecast for currency insights and analysis.

How do leading banks forecast GBP, EUR and USD will perform in the first three months of 2026?

Our January to March Quarterly Forecast arrives with the global economy at the precipice of great change. Advancements in AI will surely cause profound shifts in the economic wiring, but the path to technological utopia is strewn with tripping hazards.

Geopolitics has emerged as a foundational hazard to currency conventions. With the NATO alliance under threat, and the UK’s recovery from a sloppy autumn Budget still in its early stages, how will your business be impacted in this era of upheaval.

Download your report to find out.

A soft recovery

The doomerism that has dogged these isles has not always been justified. Business investment increased by 1.5% in the three months to October as Labour was able to claw back some credibility. Meanwhile, government borrowing costs stabilised across November and December, reducing the pressure on public finances that built across 2025.

But the Budget was a short-term fix. Larger forces have coalesced to make the UK economy feel trapped in a loop of low growth.

For British businesses, 2026 represents a chance to reset. With the Budget behind them, the first signs of a recovery are emerging, a trend that has supported sterling in the opening weeks of the year. Still, there’s plenty of time between now and Easte

Fed under threat

The Trump administration has stepped up its pressure on Federal Reserve chair Jerome Powell. Policymakers across the world rallied to Powell’s defence after the Justice Department issued a threat of criminal proceedings. Those actions threatened central bank independence and risked relegating the United States of America to emerging market status, their strongly-worded letter argued.

Each Fed gathering has been framed by politics. President Trump and treasury secretary Scott Bessant have hosted auditions for the big job, and the smart money is on a significantly more dovish economist taking over when Jerome Powell’s term ends in May. That’s likely to be one of the two Kevins, Messrs Hassett and Warsh.

Investors have shivered at the prospect of a Fed in thrall to the White House and its quest for growth at all costs. There is also the risk of further US dollar weakness and a flight from treasuries as global investors deepen their “sell America” trades.

Uncertainty abounds

The common theme in our report is the sheer uncertainty to start the year. Not even the finest minds in the world can predict what will happen in the next week, let alone the next few months.

Businesses thrive on certainty. Lacking any real basis to underpin strategic decisions can leave even the most well insulated flying blind. That’s why protecting your cashflow at times of stress – and implementing robust, comprehensive policies to guard against market risk – is an essential part of modern treasury management.

Register with Smart Currency Business today or request a call back from our team to protect your cashflow and gross profits.