The currency market proved highly volatile last week, with the US dollar plunging to multi-year lows through the first half of the session, before staging a convincing recovery towards the end of the week as US President Donald Trump nominated Kevin Warsh as the next Chair of the Federal Reserve.
Last week’s key rate movements
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GBP/EUR – Unchanged on the week
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GBP/USD – Up 0.3% on the week
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EUR/USD – Up 0.2% on the week
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AUD/USD – Up 1% on the week
Pound (GBP)
The Bank of England (BoE) will deliver its first interest rate decision of the year on Thursday. While no policy changes are expected from the bank this month, the pound (GBP) may rally if the BoE’s forward guidance strikes a hawkish note.
Euro (EUR)
The European Central Bank (ECB) is also expected to leave interest rates untouched when it concludes its latest meeting this week. However, if policymakers express concern about the recent appreciation of the euro (EUR), it may put pressure on the single currency.
US dollar (USD)
More stable market conditions should make the US dollar (USD) more data-driven this week, placing the focus on last month’s non-farm payrolls report. A healthy rise in employment numbers may help to extend USD’s recovery from multi-month lows.
Australian dollar (AUD)
An expected interest rate hike from the Reserve Bank of Australia (RBA) could set the stage for further upside in the Australian dollar (AUD) this week, particularly if the bank also signals more tightening may be necessary.
South African rand (ZAR)
Movement in the South African rand (ZAR) is likely to be tied to wider market trends this week amid the absence of any notable domestic data. If gold prices continue to slide, it's likely to weigh on ZAR demand.
Canadian dollar (CAD)
The Canadian dollar (CAD) may come under pressure later this week as Canada’s latest jobs figures are expected to report the labour market remained weak in January.
New Zealand dollar (NZD)
The New Zealand dollar (NZD) may appreciate in the first half of this week if data shows that domestic labour conditions improved in the last quarter of 2025.
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