Forex News
MUFG Bank analysts Lin Li, Michael Wan, and Lloyd Chan note that Japan’s 8 February election is reinforcing weakness in the Japanese Yen, with USD/JPY drifting back toward 160 after a brief correction. Local media suggest Prime Minister Takaichi’s coalition may secure a lower-house majority, which MUFG warns could broaden fiscal spending expectations and keep upward pressure on USD/JPY and long-end JGB yields.
Japanese politics weigh on Yen
"Japan’s political backdrop is reinforcing downward pressure on the yen as USDJPY drifts back toward 160 after its brief correction to 152."
"Local reports indicate Prime Minister Takaichi’s ruling coalition is on track to secure a lower-house majority, supported by her strong approval ratings since taking office in October."
"This would however potentially create concerns over Japan’s fiscal discipline as the market may anticipate increased government spending, which may fuel upward pressure on USD/JPY and long-end JGB yields."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Bank of England (BoE) Governor Andrew Bailey noted that a low-hiring, low-firing environment may persist or quickly shift to a no-hiring, more-firing labor market in a LinkedIn post on Friday
Key takeaways:
There's a risk that we draw too much comfort from the dip in inflation that will come in April.
The labor market does appear to have eased significantly, perhaps more than activity data would have predicted.
We should not overinterpret changes to the growth outlook in February forecasts.
The latest pay intentions data is good evidence that the disinflation process is intact but not complete.
The latest DMP data on pay and pricing plans are not at entirely comfortable levels.
The Fed must watch both sides of mandates; the situation feels 'precarious'.
It was noted that a low-hiring, low-firing environment may persist or may quickly change to a no-hiring, more-firing labor market.
Businesses are cautiously optimistic, but workers are not so sure."
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.31% | -0.54% | -0.02% | -0.40% | -0.98% | -0.91% | -0.35% | |
| EUR | 0.31% | -0.23% | 0.30% | -0.08% | -0.66% | -0.60% | -0.04% | |
| GBP | 0.54% | 0.23% | 0.53% | 0.14% | -0.43% | -0.37% | 0.20% | |
| JPY | 0.02% | -0.30% | -0.53% | -0.35% | -0.94% | -0.88% | -0.31% | |
| CAD | 0.40% | 0.08% | -0.14% | 0.35% | -0.59% | -0.53% | 0.05% | |
| AUD | 0.98% | 0.66% | 0.43% | 0.94% | 0.59% | 0.06% | 0.63% | |
| NZD | 0.91% | 0.60% | 0.37% | 0.88% | 0.53% | -0.06% | 0.57% | |
| CHF | 0.35% | 0.04% | -0.20% | 0.31% | -0.05% | -0.63% | -0.57% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The report by Nordea, authored by Jan Størup Nielsen and Anders Svendsen, discusses the Danish Krone's (DKK) recent performance against the Euro. Despite a weakened Krone, the Danish central bank has not intervened in the foreign exchange market, indicating stability in the current interest rate spread. The report also highlights factors contributing to the Krone's weakening and the potential for a seasonal decline.
Danish Krone's performance and outlook
"Despite the high level in EUR/DKK in January, new data from the Danish central bank shows that there has not yet been intervention in the foreign exchange market to defend the fixed exchange rate policy."
"When the Danish krone weakens toward previous intervention levels, the risk of an independent Danish rate hike increases and the DESTR-€STR spread widens."
"Due to this, EUR/DKK could rise above 7.470 in the coming months."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- GBP/USD climbs 0.60% as US Dollar weakens, despite lingering pressure from BoE’s dovish stance.
- BoE Governor Bailey reinforces easing bias as disinflation advances and private-sector growth stays weak.
- Soft US labor data boosts Fed cut expectations ahead of delayed NFP and CPI data.
The Pound Sterling (GBP) recovers on Friday, up by 0.60% as the US Dollar (USD) makes a U-turn, erasing Thursday’s losses amid a risk-on mood. At the time of writing, GBP/USD trades at 1.3604, yet is poised to finish the week with a 0.56% loss.
Sterling rises amid risk-on flows and softer Dollar tone, though dovish BoE signals cap upside
The US Dollar Index (DXY), which tracks the performance of six currencies versus the American Dollar, edges down 0.37% at 97.59, after reaching a two-week high of 98.03 earlier in the day.
On Thursday, the Bank of England (BoE) left rates unchanged, though it signaled that if the disinflation process met the criteria, it would cut rates. Nevertheless, BoE Governor Andrew Bailey sounded dovish, adding that the Bank Rate is expected to be reduced further.
Recently, the BoE Chief Economist Huw Pill said that it is good news that inflation is falling to target and acknowledged that private sector growth is subdued but positive.
In the US, softer US jobs data on Thursday led to a delayed reaction in the FX markets, as the Greenback posted gains on Thursday but pared those gains on Friday. Job openings falling, an increase in layoffs according to the Challenger’s report, and a jump in Jobless Claims ramped up expectations that the Fed will cut rates in 2026.
Recently, the University of Michigan (UoM) revealed that Consumer Sentiment improved in February, from 56.4 to 57.3, exceeding estimates of 55. Inflation expectations for one-year dipped from 4% to 3.5%, while they ticked up for a five-year period from 3.3% to 3.4%.
Ahead next week, traders will eye US data, Nonfarm Payrolls and the Consumer Price Index (CPI), both delayed by the short government shutdown. Also, Retail Sales and a flurry of Fed officials will cross the wires.
In the UK, Gross Domestic Product (GDP) figures on Thursday and a speech by BoE’s Governor Andrew Bailey could move the needle, if not for the ongoing domestic political turmoil surrounding the PM Keir Starmer.
GBP/USD Price Analysis: Technical outlook
The GBP/USD pair seems poised for a recovery, yet bulls are not out of the woods. They must end the session above 1.3600 to remain hopeful of testing the February 5 high at 1.3662 ahead of 1.3700. Conversely, a drop below 1.3600 could motivate sellers to drive the exchange rate to the current week’s low of 1.3508 ahead of 1.3500. On further weakness, the 50-day SMS is up next at 1.3463.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.35% | 0.71% | 1.37% | 0.28% | -0.74% | 0.09% | 0.60% | |
| EUR | -0.35% | 0.31% | 1.04% | -0.07% | -1.07% | -0.25% | 0.24% | |
| GBP | -0.71% | -0.31% | 0.60% | -0.38% | -1.38% | -0.57% | -0.07% | |
| JPY | -1.37% | -1.04% | -0.60% | -1.06% | -2.09% | -1.23% | -1.03% | |
| CAD | -0.28% | 0.07% | 0.38% | 1.06% | -0.99% | -0.18% | 0.31% | |
| AUD | 0.74% | 1.07% | 1.38% | 2.09% | 0.99% | 0.83% | 1.33% | |
| NZD | -0.09% | 0.25% | 0.57% | 1.23% | 0.18% | -0.83% | 0.50% | |
| CHF | -0.60% | -0.24% | 0.07% | 1.03% | -0.31% | -1.33% | -0.50% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Deutsche Bank Senior Economist Eric Heymann notes that the downturn in Germany's manufacturing sector has ended, with a projected increase in production of 2 to 3% in 2026. This marks the first rise in industrial production since 2021. Heymann notes that while the recovery is promising, structural reforms are essential for sustained growth.
Fiscal stimulus to drive recovery
"For 2026, we are confident that production in the manufacturing sector in Germany will rise again. An increase of 2 to 3% seems realistic to us. This would be the first increase in industrial production since 2021 and only the second since 2019."
"There is a chance that the expected increase in production this year can continue in 2027, because fiscal policy will continue to provide impetus then too and could gain broader impact."
"In the entire manufacturing sector, however, production in 2025 was 15% below its peak (2018). The data shows that the expected recovery in industrial production in 2026 and 2027 would by no means offset the losses of previous years. Without structural reforms, a return to previous production levels is hardly possible."
"For the entire manufacturing sector, however, there is a chance that the expected increase in production this year can continue in 2027, because fiscal policy will continue to provide impetus then too and could gain broader impact."
"These figures are an indication that expansionary fiscal policy is increasingly translating into higher orders for industrial companies (not least for defense goods). Improved tax depreciation conditions for investments could also provide impetus in 2026. Furthermore, (energy-intensive) companies are being relieved on the cost side by government support measures (e.g., temporary industrial electricity price, federal subsidies for grid fees)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Federal Reserve (Fed) Bank of Atlanta President Raphael Bostic said that inflation has been too high for too long, adding that the Fed can’t lose sight of inflationary concerns in an interview with Bloomberg on Friday.
Key takeaways:
I have no idea what Warsh has in mind for the Fed regime change.
The economy has been K-shaped for a while, before the pandemic.
We need to keep policy restrictive to get inflation to 2%. It will be April or May before data gives clear signals.
The Fed can't lose sight of inflationary concerns.
Inflation has been too high for too long, at plateau.
Businesses see upside potential in the economy.
Tariff effects will have run through by middle of year.
Sentiment in the district is one of cautious optimism.
I think it's doable to go back to scarce reserves.
I don't see Fed mission creep argument.
The Fed might need to lean more into non-official data."
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.26% | -0.48% | -0.02% | -0.43% | -0.90% | -0.81% | -0.23% | |
| EUR | 0.26% | -0.22% | 0.26% | -0.17% | -0.63% | -0.55% | 0.03% | |
| GBP | 0.48% | 0.22% | 0.49% | 0.06% | -0.41% | -0.32% | 0.25% | |
| JPY | 0.02% | -0.26% | -0.49% | -0.41% | -0.89% | -0.81% | -0.23% | |
| CAD | 0.43% | 0.17% | -0.06% | 0.41% | -0.48% | -0.39% | 0.19% | |
| AUD | 0.90% | 0.63% | 0.41% | 0.89% | 0.48% | 0.09% | 0.67% | |
| NZD | 0.81% | 0.55% | 0.32% | 0.81% | 0.39% | -0.09% | 0.58% | |
| CHF | 0.23% | -0.03% | -0.25% | 0.23% | -0.19% | -0.67% | -0.58% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
ABN AMRO’s Group Economics highlights that the brief US government shutdown has delayed key labour and inflation data, with methodological changes set to distort January readings. Analysts expect the unemployment rate to hold at 4.4% and Nonfarm Payrolls at 50k, while headline and core CPI are forecast at 0.3% m/m and 2.5% y/y before re-accelerating later.
US labor market and inflation insights
"Due to the short government shutdown, the labour market report has been postponed until next week Wednesday. The report will be affected by methodological updates. The household survey will incorporate new census details, leading to a substantial drop in employment and the labour force in January."
"We expect the unemployment rate to remain at 4.4%. Non farm payrolls will also be influenced by an update to the birth–death model. We expect payrolls to come in lower as a result, though with reduced risk of future negative revisions. For this Friday, we expect a 50k reading."
"The CPI report is also delayed, and will now be released next Friday. We expect both headline and core inflation to come in at 0.3% m/m, dropping both y/y rates at 2.5% due to favourable base effects. It is likely to pick up again over the coming months."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- UoM Consumer Sentiment Index came in better than expected in February's flash reading.
- USD Index stays in negative territory below 98.00.
Consumer confidence in the US improved slightly in February, with the University of Michigan's Consumer Sentiment Index rising to 57.3 from 56.4 in January. This print came in better than the market expectation of 55.
The Consumer Expectations Index edged lower to 56.6 from 57 in this period, while the 1-year Consumer Inflation Expectation declined to 3.5% from 4%. Finally, the 5-year Consumer Inflation Expectation ticked up to 3.4% from 3.3%.
Assessing the survey's findings, "while sentiment is currently the highest since August 2025, recent monthly increases have been small—well under the margin of error—and the overall level of sentiment remains very low from a historical perspective," noted Surveys of Consumers Director Joanne Hsu, and added: "Concerns about the erosion of personal finances from high prices and elevated risk of job loss continue to be widespread."
Market reaction
The US Dollar (USD) Index remains in the lower half of its daily range after this report and was last seen losing 0.35% at 97.60.
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