Published: 12/01/2026 By ECAP
AT A GLANCE
The British Pound starts the week under pressure against the Euro as global sentiment softens and political uncertainty in the US weighs on markets.
The Euro is finding some support amid Dollar weakness, with attention turning to inflation data later this week.
The U.S. Dollar is on the back foot after renewed concerns over Federal Reserve independence unsettled investors and dented confidence.
POLICY SHOCKWAVES
The British Pound has edged lower against the Euro after failing to hold recent highs, with the move reflecting a softer tone in global markets rather than fresh UK developments. With little domestic data due, attention is shifting toward longer-term growth prospects and the pace of Bank of England easing following December’s policy move. For now, the Pound remains sensitive to broader risk sentiment, which has turned more cautious at the start of the week.
The Euro is modestly firmer as it benefits from a weaker Dollar and relative stability in policy expectations. After easing back from recent highs, the single currency is holding steady with investors awaiting inflation data later in the week. While momentum has slowed, expectations that price pressures remain contained and policy broadly unchanged are helping underpin the Euro in the near term.
The US dollar has weakened sharply following reports of increased political pressure on the Federal Reserve, including threats of legal action against its leadership. These developments have unsettled markets, leading to declines in equities and government bonds and prompting a reassessment of longer-term policy credibility. While near-term policy may be unaffected, concerns over central bank independence have weighed on the Dollar, with investors now looking ahead to US inflation data for further direction.
Data supplied by GC Partners