The war in the Middle East triggered a sharp appreciation of the US dollar last week, with the currency poised to maintain this bullish momentum into the coming session as a looming energy price crisis sparks fresh unease.
Last week’s key rate movements
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GBP/EUR – Up 1.2% on the week
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GBP/USD – Down 0.6% on the week
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EUR/USD – Down 1.6% on the week
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AUD/USD – Down 1.1% on the week
Pound (GBP)
The UK will publish its latest GDP figures this week. Economists forecast that January’s month-on-month figures will show a modest uptick in growth. Still, any upside in the pound (GBP) may be limited as the growth figures risk appearing out of date amid the current economic backdrop.
Euro (EUR)
There is limited Eurozone data on offer this week, which may leave the euro (EUR) vulnerable to concerns over Europe’s emerging energy crisis.
US dollar (USD)
In addition to drawing support from the ongoing geopolitical uncertainty surrounding the war in the Middle East, the US dollar (USD) may also be underpinned by the publication of the latest US consumer price index this week, amid forecasts US inflation remained sticky in January.
Australian dollar (AUD)
This week sees the release of Australia’s latest consumer and business confidence figures. A continued improvement in morale could prove supportive of the Australian dollar (AUD), although any upside may remain limited so long as the conflict in the Middle East continues to dominate headlines.
South African rand (ZAR)
South Africa will also publish its latest GDP figures this week. Analysts are predicting an acceleration of growth in the last quarter of 2025, which may underpin the South African rand (ZAR), so long as risk appetite doesn’t crater too hard.
Canadian dollar (CAD)
Soaring oil prices are likely to remain a source of support for the commodity-linked Canadian dollar (CAD) through the coming session, although an expected rise in domestic unemployment could pose a risk to the ‘loonie’ in the tail end of the week.
New Zealand dollar (NZD)
With NZD data in short supply, movement in the New Zealand dollar (NZD) is likely to be tied to market risk dynamics this week. If headlines continue to be dominated by the war in the Middle East, support for the ‘kiwi’ is likely to remain limited.
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