Finance
Sterling set for weekly decline as traders await key UK economic data
Published by Global Banking and Finance Review
Posted on January 9, 2026
2 min readLast updated: January 9, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on January 9, 2026
2 min readLast updated: January 9, 2026
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.
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.
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.
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.
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)
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.
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.
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