In a week with little movement of note among major currencies, the Yen provided the main excitement, soaring by over 2% against all other G10 currencies and dragging with it most East Asian currencies. This performance is mirrored in the Japanese bond market, which has traded well since Takaichi’s electoral victory, as her officials have sought to reassure markets about fiscal policy.
Beyond Asia, a strong payroll report from the US and a milder than expected inflation data are starting to generate a goldilocks narrative even as the stock market looks somewhat wobbly. Trumpian headline risk has receded for now, and currencies are reacting to the familiar risk factors like macroeconomic data and interest rate expectations. Every G10 currency except the Australian dollar and remain top performers so far in 2026.
Enrique Díaz-Álvarez, Chief Economist at Ebury said: “Next week data calendar is dominated by the release of the PMI indices of business activity, the most important leading indicator worldwide. All major economic areas will receive their respective reports on Friday. We will pay very close attention to the European numbers, to see if the tentative upturn in German manufacturing orders is confirmed and if the fiscal stimulus package is finally starting to show in the data. Beyond that, a busy week in the UK, with labor market data out Tuesday and the inflation report for January on Wednesday.”
GBP:
Sterling was largely flat after a week of mixed political news from the UK. On the positive side, Starmer’s leadership seems safe, for now. On the other, the price seems to be that left wingers seem to be gaining influence in the labor party. Fourth-quarter GDP data was disappointing but lagged. The slew of labor market data for December and January will be much more important, followed by equally critical inflation data on Wednesday and PMI indices on Friday. Markets are pricing in about a two-thirds likelihood of a cut at the next Bank of England meeting in March, but we will have a much clearer view after this week’s data deluge.
EUR:
The common currency spent last week in a holding pattern against most of its major peers, as little news of note came out of the Eurozone. We now look to this week’s industrial production data (Monday) and particularly the PMIs indices of business activity (Friday) to confirm the early signs of a rebound in German manufacturing data seen in the latest order backlogs, as the massive German stimulus package finally winds its way into the real economy. With the ECB finished cutting rates, we think that the Euro will drift higher against most of its peers for the rest of the year.
USD:
We saw two pieces of good news from the US economy last week. First the delayed January payroll reports showed much stronger job creation than expected, along with a downtick in unemployment and faster wage growth. Then, Friday’s inflation report suggested that this reacceleration is not causing higher inflation pressures, though the actual numbers remain above Federal Reserve targets. Neither of these data points will provide much ammunition to the Fed doves, but we await the new chair nominee Warsh’s confirmation hearings to gauge his impact on the balance of power within the institution. We remain mindful of the risks of institutional degradation and political pressure for lower rates and maintain a long-term bearish view of the dollar.
About Ebury:
Ebury is the leading payments specialist that helps small- and medium-sized businesses (SMEs) operate and grow internationally. It is a global fintech company with a comprehensive and tailored offering to enable businesses to make and receive cross-border payments, open currency accounts, and manage currency risk.
Founded in 2009 by Juan Lobato and Salvador Garcia in London, Ebury now has over 1,800 employees serving more than 21,000 customers across 40 offices in 29 markets. We have capabilities in 130+ currencies. Ebury has grown rapidly and profitably in recent years.
In FY 2025, revenues rose to £286.5 million, and EBITDA grew to £44.9 million. It is regulated by the Dubai Financial Services Authority (DFSA) in the UAE and backed by top-tier investors, including Banco Santander, who have a majority share ownership.
