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January 5, 2026Cross-Border
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UK: Weekly FX Market Update 5 January

GBP

  • UK Public investment for 2026-27 will rise by £13 billion, while private investment ‘will stagnate’ says the PwC chief economist.

  • Bank of England Governor Bailey says that people feel the economy ‘has got stuck’. The Office for Budget Responsibility couldn’t identify a single measure in the budget that would materially boost economic growth.

  • But, despite the gloom can USD weakness keep GBPUSD buoyant?

  • By way of contrast, could Euro strength produce a weaker GBPEUR?

EUR

  • Will the Eurozone start to finally gain the benefits of Germany’s spending plans as well as the European Union’s defence investments?

  • Will there be a just and lasting peace between Ukraine & Russia?

  • Investors may look to Eurozone Flash CPI on Wednesday for direction on the Euro.

USD

  • 2025 ended with the US economy expanding at an annual pace of 4.3% in Q3, driven by a surge in consumer spending. This was the best performance since Q3 2023.

  • However, the electorate is complaining about a cost-of-living crisis and media reports on a ‘k shaped’ recovery. This may be good for investors but risks leaving many others behind.

  • All eyes are on President Trump as he ‘breaks international law’ (The Financial Times) by ‘kidnapping’ Venezuela President Maduro. Will investors seek the security of the dollar, or will we see another year of USD weakness?

  • With the Federal Reserve cutting rates in December, partly due to the labour market, will Friday’s release of Non-Farm Payrolls give markets direction?

Main events for this week:

Mon Jan 5

15:00 USD ISM Manufacturing PMI

Tue Jan 6

Italy Bank Holiday

09:00 EUR Final Services PMI

09:30 GBP Final Services PMI

14:45 USD Final Services PMI

Wed Jan 7

00:30 AUD CPI

10:00 EUR CPI Flash Estimate

13:15 USD ADP Non-Farm Employment Change

15:00 USD ISM Services PMI/JOLTS Job Openings

Thu Jan 8

07:30 CHF CPI

13:30 USD Unemployment Claims/Trade Balance

Fri Jan 9

01:30 CNY CPI

13:30 CAD Employment Data

13:30 USD Unemployment Rate/Average Hourly Earnings/Non-Farm Employment Change

15:00 USD Prelim UoM Consumer Sentiment/Inflation Expectations

About the author

Trevor Charsley

Trevor Charsley

Senior Market Strategist

Trevor has over 25 years' trading and sales experience. He produces regular market and technical analysis as well as help with the structure and management of FX hedging policies. Trevor is often listed among the top "currency forecaster on Bloomberg".