USD: Data light, event risk heavy

Recent US releases have offered little conviction for direction. Near-term price action is more likely to be driven by today’s risk events than by the macro tape.

Two offsets to the drag from softer oil stand out. First, expectations for a solid US jobs print. Second, the US Supreme Court tariff decision, where market pricing leans towards an unfavourable outcome for tariffs. A negative ruling could still translate into USD support if investors interpret it as pushing the Fed narrative in a more hawkish direction. The tariff channel has shown up more clearly in labour market dynamics than in inflation, so the initial reaction could be a modest hawkish repricing across the front end.

We are also watching EUR/DKK closely for Greenland-linked headline risk. Price action suggests the Danish central bank may already be leaning against the move.

GBP: Trend intact, but momentum looks tired

Cable has continued to print higher highs and higher lows, keeping the broader upswing technically in place. That said, the retreat from 1.35 over recent sessions has taken some energy out of the move, and the lack of upside follow-through points to fading bullish conviction.

This matters more because spot has pushed into a long-term resistance zone, broadly 1.35 to 1.40. It is early to argue for a major peak, but inability to sustain levels above 1.35 would be an early warning signal, particularly for positioning built after Monday’s bullish engulfing pattern.

A break below Monday’s low at 1.3415 would raise the risk of long liquidation, opening the door to a sharper corrective phase. Initial support sits around 1.34, a key technical level that also aligns with the 200-day moving average. A clean break would shift the balance towards a more material reversal. On the topside, 1.3500 is the first cap, with 1.3550 the next hurdle.

Near-term direction likely hinges on upcoming US labour market data. Beyond that, the next leg is likely to be shaped by the Bank of England’s policy choices later this quarter.

EUR: GBP/EUR rally stalls at long-term resistance

The first full trading week of 2026 extended sterling’s short-term rally against the euro, taking GBP/EUR to 1.1568 on Tuesday after an outsized 0.60% gain on Monday.

Technically, the move looked stretched, with daily RSI flagging overbought conditions. The 200-day moving average, near 1.1565, acted as a clear ceiling and encouraged profit-taking. The cross has since slipped back towards 1.1520, with the pullback still contained.

We look for the near-term consolidation to gravitate towards the nine-day moving average around 1.1510. While spot holds above that area, the short-term tone remains constructive into next week’s UK GDP release (Thursday).

The broader sterling bid has carried into early 2026, building on the post-26 November UK budget rally. Market expectations were well managed into the event, and the lack of surprise limited downside follow-through for GBP.

That said, political risk remains a live theme. The May elections are a key marker, with the potential for domestic political change to refocus attention on UK fiscal constraints, elevated debt metrics and weak productivity.

Looking ahead

• US: Supreme Court tariff ruling today, plus near-term labour market data as the key USD driver. Watch for front-end rates repricing.

• UK: GDP next Thursday as the immediate macro test for sterling’s resilience.

• Rates: BoE guidance later this quarter likely to determine whether GBP strength extends or fades.

• Europe: Keep an eye on EUR/DKK for intervention signals if Greenland headlines intensify.