£-€ records biggest daily drop since November

logo18year
Daily Market Report
Currency insight from
Excel Currencies
banner1

waterman

Written by Dan Waterman
January 21st 2026
Financial markets prepare for what President Trump may or may not say later today..

President Trump is speaking in Davos this afternoon where the 56th annual meeting of the World Economic Forum is taking place. 

This event hosts world leaders in business and of nations to discuss all things the future, growth, trade and various similar areas. But exactly the same as last year (tariffs, Ukraine, EU security), all anyone is really interested in is what President Trump is going to comment on and demand this time.

His unpredictability means this afternoon is an 'all bets are off' scenario.

Greenland is of course the hot topic right now and if Trump plays down the situation, financial markets will improve (GBP up). If he doesn't, financial markets will take another dive (GBP down).

ECB President Lagarde has already spoken at the event saying 'the US are behaving strangely as an ally' and 'the curtain is coming up on a New World Order'.

Canadian Prime Minister Mark Carney had this to say earlier "Middle powers must act together because if we're not at the table, we're on the menu". Middle powers referring to nations like Canada, Australia and Brazil.

The supposed most safe-haven asset of all; gold, has jumped 2% today and that comes after a 1% gain already yesterday with GBP (not a safe-haven) losing ground versus both the Euro and USD. This proves the 'risk-off mood'. 

For GBP v EUR, we see the mid-market rate back down to where 2026 started, so nearly 1% of gains wiped off. But it's what happens with Trump later today that will determine the short-term value of the Pound. We could see a bounce of 0.5% or a loss of a further 1% is my prediction.

Earlier today, the UK published December's inflation report and as expected it was a bit of a non-event this time round. Headline inflation ticked 0.1% higher (meaningless at this stage) with the more important core number holding steady.

Inflation's 'time in the spotlight' will no doubt come around again soon, but for now it isn't running hot, is lower than expectations and quite frankly there are more important variables at play for the BoE, GBP and the whole world right now.