Published: 05/01/2026 By ECAP
AT A GLANCE
The British Pound is stronger against the Euro, supported by positive market sentiment and a lack of UK data, while easing slightly against the Dollar after strong year-end gains.
The Euro is steady, with attention on German and Eurozone inflation data later this week, though expectations around ECB policy are well established.
The U.S. Dollar is firmer amid geopolitical tensions, but traders remain cautious ahead of Friday’s key US jobs report..
NEW YEAR MOMENTUM
The British Pound is pushing higher against the Euro, supported by a positive global backdrop and a lack of UK data to disrupt sentiment. Equity markets remain buoyant, which has helped underpin the Pound into the new year. Against the Dollar, sterling has pulled back modestly after a strong rally into Christmas, a move that appears to reflect consolidation rather than a shift in outlook. With UK data light this week, external factors are likely to dominate.
The Euro is steady but faces an important week for inflation data. German inflation figures are due Tuesday, followed by the wider Eurozone release on Wednesday. These readings will be watched closely for confirmation that price pressures remain above target, which could reinforce expectations that policy remains on hold for now. While any reaction may be short-lived, firmer inflation would help keep the Euro supported in the near term.
The US dollar has found some support at the start of the week amid heightened geopolitical tensions following recent US actions in Venezuela. Comments from President Trump suggesting Washington will dictate policy in Caracas have increased uncertainty, encouraging some defensive positioning. That said, gains have been measured, with investors reluctant to commit ahead of Friday’s US jobs report. The labour data remains the key test for whether the Dollar can extend its early year recovery.
Data supplied by GC Partners