UK jobs and inflation data will take centre stage this week

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USD:
USD under pressure” has been the theme of 2026 and after last week’s US inflation numbers, it looks set to continue. CPI printed lower than expected which will allow the US Central Bank to cut rates later this year, which will weaken the USD.
Markets now price in a 90% chance of a ‘hold’ in March rates (this was around 80% last week) and a 52% chance of a rate cut in June.

Today’s US holiday and Lunar New Year across parts of Asia mean a quiet start to the week.

GBP:
Benefitting from a weak USD, GBP/$ trades above 1.3600, having started the year around 1.3400. However, recent poor GDP data might prompt UK bank officials to vote for a rate cut in March which will weaken the pound.

Jobs and inflation data this week will be closely watched - if a cooling labour market and softening inflation continues, a rate cut will be more likely. Alongside this hard data, domestic political turmoil is also weighing on GBP, which is struggling around 1.1500 vs EURO. Betting markets show a 70% chance that PM Starmer will step down by the end of June.

EURO:  
EUR is still suffering due to the war in Ukraine, but may gain support from the central bank’s ‘wait-and-see’ stance on interest rate cuts. However, on Friday we saw an upward revision to EURO GDP which should help the shared currency.

Elsewhere:
Australia: The Australian dollar has strengthened from 2.0200 to 1.925 against GBP since December spurred on by the Central Bank raising rates - in stark contrast to other major economies. Tuesday’s central bank meeting minutes will be closely watched for forward guidance.

This weeks data:
Monday:
EUR: Industrial Production
US: Fed speeches

Tuesday:
AUS: Central Bank meeting minutes
GER: Inflation data / economic sentiment data
UK: Employment data / Earnings
CAD: Inflation data
US: Fed speeches

Wednesday:
NZD: Interest rate decision
UK: Inflation data (Producer & Consumer)
USA: Housing data / Durable Goods orders / Central Bank minutes

Thursday:
AUD: Employment data
EUR: Central Bank speeches / Consumer confidence data
US: Housing data / jobs data / Fed speeches

Friday:
Germany: Producer prices
UK: Retail Sales data
EUR: Manufacturing and Services data / ECB President speech
USA: Inflation data / Manufacturing and services activity