Published: 07/01/2026 By ECAP
MOMENTUM TESTED
The British Pound is finding some resistance after it's recent gains, particularly against the Euro. Sterling pushed higher earlier this week but stalled near a key long term level, prompting some consolidation. UK data offered limited support, with services activity revised lower than first estimated, tempering optimism about near term growth. With little UK data ahead, the Pound’s direction is likely to depend on broader market sentiment and developments outside the UK.
The Euro has been on the defensive, but attention this morning is on inflation data due this morning. Headline and core CPI are expected to remain sticky, which would reinforce the view that the ECB is in no rush to ease policy further. With momentum having cooled in recent sessions, the inflation release will be key in determining whether the Euro can stabilise or extend recent losses.
The US Dollar is firmer as geopolitical developments draw attention back to the US. Announcements around Venezuelan oil shipments to the US and tougher rhetoric over Greenland have increased uncertainty, encouraging some defensive positioning. While markets are still weighing the broader economic outlook, these developments have helped support the Dollar for now, with traders remaining cautious and selective in their positioning.
Data supplied by GC Partners