GBP came under the spotlight last week, pressured by renewed UK political uncertainty and a dovish Bank of England. Questions over PM Starmer’s leadership, upcoming by-elections, and the BoE’s 5–4 decision to hold rates drove the GBP sharply lower, posting its largest drop versus the EUR since last summer, with options markets signalling rising bearish sentiment.
Elsewhere, USD strength was supported by a surprise upside in Monday’s ISM manufacturing survey and higher long-end US yields midweek.
Euro-area CPI continued to ease, keeping the ECB cautious in their policy statement on Thursday.
AUD performed well following the hawkish rate hike by the RBA.
*Daily move - against G10 rates as of 17:00 GMT, 06.02.26
** Indicative rates - interbank rates as of 17:00 GMT, 06.02.26
GBP is under pressure this morning after Morgan McSweeney quit as chief of staff over the appointment of Peter Mandelson as ambassador to Washington, raising further doubts over the future of Keir Starmer as PM.
UK GDP for Q4 2025 is expected to show a soft finish to the year, with early 2026 growth likely to pick up as budget uncertainty fades and past monetary easing flows through. Risks include a weak jobs market and potential Labour Party leadership changes.
Eurozone trade data will reflect ongoing US tariff pressures and possible redirection of Chinese shipments to Europe.
In the US, Wednesday’s delayed January jobs report is expected to show 70,000 new payrolls and a steady 4.4% unemployment rate, while Friday’s CPI will be a key test of inflation momentum and Fed guidance.
Overall, markets will focus on UK and US data, with euro-area trade flows and political risks shaping sentiment and near-term FX positioning.
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