Pound Steadies as Dollar Holds Firm
- Liam Ballard
- Jan 16
- 2 min read
Market Report: 16 January 2026
GBP: Pound steadies ahead of key domestic signals
Sterling is trading on a more stable footing this morning, consolidating recent gains after a volatile mid-week session. The pound is hovering just below the 1.3450 level against the US Dollar, as markets pause ahead of upcoming UK data and reflect on yesterday’s global risk repricing. While external factors continue to dominate broader FX flows, there has been a modest return of focus to domestic fundamentals.
Recent UK data has painted a mixed picture: consumer confidence remains subdued, but services sector activity has shown tentative signs of resilience. Markets are increasingly attuned to the implications for Bank of England policy, particularly as wage pressures remain sticky despite a cooling labour market. In the near term, GBP/USD is expected to trade within a 1.3350–1.3480 range, with any break likely driven by shifts in global risk sentiment rather than UK-specific headlines.
EUR: Euro pressured as risk appetite fades
The Euro remains under mild pressure this morning, struggling to attract buyers as broader risk sentiment deteriorates. EUR/USD continues to trade with a heavy bias, edging closer to the lower end of its recent range as investors grow cautious over the Eurozone’s growth outlook. Persistent concerns around global trade relations and weaker industrial momentum are weighing on the single currency.
Although recent survey data has suggested stabilisation in forward-looking sentiment, hard data continues to lag. Manufacturing output across the bloc remains soft, particularly in Germany, reinforcing expectations that the European Central Bank will maintain a cautious, accommodative stance well into 2026. With equity markets losing momentum, the euro remains vulnerable to further downside, with technical support eyed around the 1.0780–1.0800 region.
USD: Dollar supported by yields and defensive demand
The US Dollar is holding firm at the end of the week, underpinned by elevated Treasury yields and ongoing safe-haven flows. Yesterday’s Retail Sales data surprised modestly to the upside, reinforcing the narrative of a resilient US consumer and helping to temper expectations of near-term Federal Reserve easing. As a result, the dollar has retained its bid tone across most major pairs.
Political uncertainty and lingering concerns around global growth continue to favour the greenback, particularly against cyclical currencies. With little in the way of major US data due today, markets are likely to remain driven by positioning and sentiment into the weekend. Any further deterioration in risk appetite could see the dollar extend gains, especially against the euro and sterling.
