Investor sentiment is positive and traders turn risk-on, boosting GBP..
|
| As a high-beta currency, the Pound performs well in both stable and growth times and the beginning of 2026 has been just that.
Stocks, gold and crypto have all gained so far this year and this has meant Sterling has gained in value too. GBP is highly sensitive to market sentiment and often follows the performance of the S&P 500 (when other variables are not as strong as sentiment).
GBP v EUR finds itself at the highest level since September 25th.
In just 2-months, £-€ has gained 2%, breaking away from the UK Autumn Budget shackles. Many analysts we follow suggest we may have entered 'out-performance' and so maybe expect a dip from here rather than a continuation of the trend.
Currently, the pair sits just 1% below 2025's average and so in our view represents 'good' value.
GBP v USD also finds itself at the highest level in 3-months and has gained 4% in the last 2-months. Cable is almost 3% above 2025's average and so a really great time to be exchanging.
UK assets (primarily defence and energy) have been in demand since the US military action in Venezuela and what the US could do next (Greenland) is also playing a part. Whilst negative geopolitical news is usually bad for Sterling, traders and investors don't seem too worried about the global economic impact (yet).
The UK's PMI data for December officially came out worse than the preliminary result today and for the first time in 4-months (51.4 v 52.1). The EU fared much better with a result of 51.5 v 51.9 and it means the yearly economic growth battle in 2025 was won by the EU for the first time in a very long time.
The weather in Europe is bloody cold at the moment and no doubt this will be a headwind in the days to come for both £ & € as an economic impact will be surely felt. |
|