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Home > Finance > Sterling set for weekly decline as traders await key UK economic data

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Sterling set for weekly decline as traders await key UK economic data

Published by Global Banking and Finance Review

Posted on January 9, 2026

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Tags:GDP monetary policy UK economy foreign currency employment opportunities

Sterling Faces Weekly Drop as Traders Anticipate Key UK Data

Impact of Upcoming Economic Data on Sterling

By Joice Alves

LONDON, Jan 9 (Reuters) - Sterling steadied against the dollar on Friday after falling to the lowest level this year and was set for weekly declines as traders awaited key data to gauge the state of the UK economy.

Investors are waiting for clearer indications about the economy, with gross domestic product data due on Thursday and jobs data the week after, which could give more clues to the Bank of England monetary policy trajectory.

Current Performance of Sterling

Sterling was last flat at 1.3436, after falling to its lowest since December 31, and it was set for its second consecutive weekly decline.

Market Expectations and Predictions

The Recruitment and Employment Confederation and accountants KPMG report is also expected next week.

"We remain mindful of immediate sterling downside risks should the upcoming KPMG/REC report on jobs, now slated for release into the start of next week, indicate a continued labour market deceleration, in particular as regards wage pressures," said Jeremy Stretch, Chief International Strategist at CIBC Capital Markets.

Money markets are pricing an 88% chance of the BoE holding its rates at 3.75% when it meets on February 5, after December's 0.25% cut.

Sterling was one of the best performing currencies last year, rising almost 8% against the dollar.

The euro also steadied against sterling at 86.68 pence, but it is still set for its fourth consecutive weekly decline against sterling. It had dropped as low as 86.44 pence on Tuesday, its lowest since mid-September.

Political and Fiscal Support for Sterling

A reduction in UK fiscal and political risks has supported the British currency since finance minister Rachel Reeves presented the budget in November.

It received some support earlier this week from hints of Britain pursuing a closer relationship with Europe.

Closer Ties with Europe

Britain should seek closer alignment with the European single market on an "issue-by-issue" basis when it is in the national interest, Prime Minister Keir Starmer said on Sunday.

(Reporting by Joice Alves, Editing by William Maclean)

Frequently Asked Questions about Sterling set for weekly decline as traders await key UK economic data

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 other than the domestic currency of a country, used for international trade, investments, and travel, often traded in foreign exchange markets.