Finance
Sterling edges higher, key UK data flurry up ahead
Published by Global Banking and Finance Review
Posted on January 14, 2026
Sterling edges higher, key UK data flurry up ahead
Impact of Upcoming Economic Data on the Pound
LONDON, Jan 14 (Reuters) - The pound rose on Wednesday, gaining against the dollar, euro and yen, ahead of economic growth data later this week that might help shape expectations for Bank of England monetary policy in the coming months.
Current Performance of the Pound
Sterling was up 0.2% at $1.3447. It has barely made any headway against the dollar so far in January, but has gained ground against the euro, which has lost 0.7% so far this month.
Market Sentiment and Speculation
Geopolitical tensions in Iran and Greenland, along with U.S. President Donald Trump's latest attack on the independence of the Federal Reserve have made investors more cautious about the dollar in the last week or so.
Expectations for Bank of England Rate Cuts
Investors have warmed to the pound so far in 2026. Weekly data from the U.S. regulator shows they cut their bearish sterling positions by the most in five months in the first week of January.
Speculators now hold a long dollar position - one that assumes the U.S. currency will rise against the pound - worth just $2.577 billion, down from $6.586 billion at the end of December, the largest such position since September 2019.
UK inflation cooled more quickly than expected towards the end of 2025, while growth remains sluggish. Markets expect just two rate cuts from the BoE this year, something analysts at Morgan Stanley say is overly optimistic and weak readings of growth and price pressures could prompt a drop in the pound.
"Soft UK employment and CPI for December would be key catalysts for markets to reprice for a February BoE rate cut, compared to almost nothing priced currently," they said in a note.
Consumer price data lands next week, along with monthly jobs figures, while GDP data is due on Thursday. Economists polled by Reuters expect the UK economy to have contracted by 0.2% in the three months to November, leaving the annual rate of growth at 1.1%.
(Reporting by Amanda Cooper; Editing by Jane Merriman)
Frequently Asked Questions about Sterling edges higher, key UK data flurry up ahead
1What is the Bank of England?
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.
2What is GDP?
Gross Domestic Product (GDP) measures the total economic output of a country, reflecting the value of all goods and services produced over a specific time period.
3What is monetary policy?
Monetary policy involves the actions of a central bank to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation and stabilizing currency.
4What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to stabilize the economy.
5What is foreign currency?
Foreign currency refers to any currency that is not the domestic currency of a country, often used in international trade and investment.
