The holiday period in both the UK and the US is now behind us, and with it we are seeing liquidity return to the markets and a gradual shift back toward more normal trading conditions. One clear theme through Christmas and the New Year was continued weakness in the US Dollar, and so far there are few signs that this trend has fully run its course.
As we enter the first full trading week of the year, there are several data releases worth watching, but geopolitical risk has also crept back into focus. Heightened tensions surrounding U.S.–Venezuela relations, ongoing sanctions discussions, and broader instability in parts of Latin America have added a layer of uncertainty for markets. While headlines have been mixed, the key takeaway for investors has been an increase in risk sensitivity, particularly across commodities, emerging market currencies, and safe-haven assets.
From a market perspective, geopolitical uncertainty tends to support gold and increase short-term volatility in oil, while also influencing risk sentiment in the US Dollar. Gold remains well supported as investors hedge against political and economic uncertainty, while oil prices remain sensitive to any developments that could impact future supply dynamics in the region. Emerging market currencies in Latin America continue to trade cautiously, reflecting both global risk conditions and regional political concerns.
Turning to this week’s economic calendar, Monday starts with UK mortgage approvals, where expectations are for a slightly softer reading. That said, with UK banks beginning to ease mortgage pricing, there is scope for activity to pick up gradually over the coming months. In the US, ISM manufacturing data is due and is expected to improve modestly, which would be a positive signal for the broader US economy.
Tuesday brings services and composite PMI data from Europe, the UK, and the US. As always, readings below 50 indicate contraction, so these releases will be closely watched for confirmation on whether economic momentum is stabilising or continuing to slow.
On Wednesday, construction PMI data is released across Europe, the UK, and the US, alongside flash inflation data from the Eurozone, expected to remain steady at 2.4 percent. In the US, ADP employment figures are forecast to show a modest increase, while factory orders are expected to decline, reinforcing the picture of a cooling but resilient economy.
Thursday sees Eurozone consumer confidence data, expected to deteriorate slightly, followed by US weekly jobless claims, where a rise is anticipated. Any further softening in the US labour market would add pressure on the Dollar and reinforce expectations of future rate cuts later in the year.
The week concludes on Friday with European retail sales data and, most importantly, US Non-Farm Payrolls. Expectations are for a weaker jobs number, but as always this release is prone to surprises and is likely to be the main volatility event of the week.
Overall, while data will drive short-term moves, broader themes such as Dollar weakness, geopolitical uncertainty, and shifting interest rate expectations remain central as we begin the year. In this environment, planning and risk management remain key for anyone with upcoming currency requirements.
GBP/EUR 1.1480 GBP/USD 1.3416 GBP/AED 4.9306
GBP/AUD 2.0100 GBP/CHF 1.0670 GBP/CAD 1.8497
GBP/NZD 2.3342 EUR/USD 1.1669 GBP/ZAR 22.1086