After treading water against the US dollar and euro last week as the febrile atmosphere at Westminster calmed, somewhat, this is the week when economics comes back in force. From tomorrow, every day has something meaty for the markets to chew on, starting with unemployment and earnings.
In Washington, the markets may be closed today (for Presidents’ Day) but the row between the White House and the Federal Reserve is still hanging over. Central bank independence is one of those boring-sounding things that matters a lot when it’s tested. It’s been a nagging worry for the dollar, even when the day-to-day data looks fine, with non-farm payrolls much better than expected and inflation down to 2.4%
Back home, the sense of a beleaguered government has kept sterling traders cautious. The week certainly ended better for the prime minister, but you know what they say about weeks and politics – the story may return at any time.
Last Thursday’s UK GDP number was anaemic to say the least, at 0.1% for the last quarter of 2025. The economy avoided anything dramatic, but it hardly shouted momentum.
So, after a week where sterling and the euro mostly traded in tight ranges, the next push is likely to come from the scheduled releases. The ONS has a busy run this week, and it lands right as markets are deciding whether 2026 is finally the year growth and inflation move back into something like a normal rhythm.
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