Finance
Sterling holds steady as dollar stays under pressure
Published by Global Banking and Finance Review
Posted on January 13, 2026
Sterling holds steady as dollar stays under pressure
Market Overview and Economic Factors
LONDON, Jan 13 (Reuters) - The pound held onto its gains from the previous day against both the dollar and the euro on Tuesday, with the currency having been a somewhat surprising beneficiary of global geopolitical turmoil.
Sterling was last flat on the dollar at $1.3471 having gained 0.47% on Monday as the U.S. currency took a hit from investor concerns about the independence of the Federal Reserve.
The pound was last at 86.62 pence to the euro, again steady on the day, after the euro had dropped 0.23% on Monday.
Impact of U.S. Economic Concerns
There is little in the way of economic data this week that could affect the pound. Gross domestic product data is due on Thursday, but investors are largely waiting until next week's jobs and inflation data, which could shape expectations for Bank of England monetary policy.
Market pricing reflects expectations of one and likely two rate cuts in the first half of this year, though a quick slowing of inflation could see more monetary easing.
Until the data is released, the pound's moves against major peers are largely shaped by events elsewhere, most notably the United States.
Investor Sentiment and Currency Movements
"It's less to do with UK fundamentals -- which we still think are weak -- it's rather that events elsewhere are providing a distraction from Britain's problems," said Nick Rees, head of macro analysis at Monex Europe.
As well as worries about the independence of the Federal Reserve, investors are also digesting a vast amount of political and geopolitical news from around the world.
Analysts' Perspectives on Currency Trends
But while that seemed to boost the pound against the euro on Monday, Nomura analysts, who recommend traders buy the euro against the pound, say they think recent developments should support their argument.
"Our long EUR/GBP trade is positive exposed to developments that weigh on investor sentiment regarding US assets," they wrote in a Monday note.
"The scope for a shift in investment allocations or even a slowing of inflows into the U.S. – whether due to geopolitical risks (over Greenland for example) or concerns about Fed independence – would have positive repercussions for (the euro)."
(Reporting by Alun John; Editing by Emelia Sithole-Matarise)
Frequently Asked Questions about Sterling holds steady as dollar stays under pressure
1What is monetary policy?
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation and stabilizing currency.
2What is foreign currency?
Foreign currency is any currency that is not the domestic currency of a particular country. It is used in international trade and investment.
3What are financial markets?
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives, facilitating the flow of funds in the economy.
4What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
