Happy New Year and welcome to our first report of 2026. I'll kick off the year by offering a quick recap of 2025 for the majors..
| GBP
| The Pound's performance in 2025 was dominated by 3 things; the bond market, the Autumn Budget and interest rates.
Unfortunately, all 3 key market drivers remain for this year (although Government Budgets should be less public and less worrisome?). A leadership challenge may be on the cards for Prime Minister Starmer and poor economic growth and these could both destabilize the Pound this year.
GBP v EUR lost 5% in 2025 and it witnessed the most volatility since 2022 (7%). On a £200,000 exchange, that's a large loss of €12,000 in buying power.
Most of the 'collapse' occurred in the second half of the year, which is why for us we personally saw our pipeline of overseas property buyers dramatically rise as many delayed action. Case and point;
Online property searches when rates were holding at 1.20 for 5-months, viewing trip in March/April when rates were 1.18/19 and then a huge drop to 1.14 in July will naturally put most people off (especially with property prices still mostly rising abroad).
The currency pair starts 2026 at the exact same rate as 2024 (1.15 with 2025 being at 1.20), however the prognosis couldn't be much different.
Back in 2024, we saw a pretty linear climb from 1.15 to 1.21 with the Pound being the second strongest major currency of the year (2025 saw the exact opposite). 2026 is very unlikely to perform the same as 2024 because the main market drivers are the not the same, the view on GBP/UK is not the same from investors/traders and the variables at play have grown.
A quick word on GBP v USD which witnessed a very good year climbing 7% overall and traded within its usual volatility range of about 12%.
This pair was largely driven by President Trump who will be the main variable again for 2026. £-$ historically does like to gain one year and then lose the next, so this trend could play out, but we expect a solid year again from the pair.
EUR
2025 saw the Euro reawaken as a safe-haven currency. In recent years, traders and investors have been 'turned-off' by the single currency for many reasons, but last year that all changed.
A key reason here is the 'de-dollarization' of USD and resurgence in Euro payments worldwide, as-well-as EU nations spending once again on defence and infrastructure.
Elsewhere, the ECB have hugely helped the EU/€ become a safe bet out of the pandemic. Their interest rate cycles have worked, inflation is firmly under control, economic growth has turned positive and is growing and Germany has unshackled itself.
EUR v USD jumped 13% in 2025, an astonishing performance and this comes after being so close to parity earlier in the year. There is a lot to like here stability wise and we can probably expect more of the same in 2026, which is a concern for USD-EUR & GBP-EUR exchanges.
USD
The US Dollar index saw its worst yearly performance since 1979, falling 10%. This was almost exclusively fueled by President Trump.
So much happened last year to do with the US it's actually laughable and we warned this is what a Trump administration brings when he was elected for round two; chaos.
We expect a different kind of chaos this year, but it will be chaotic again nonetheless. A new Fed Chair is coming in a few months' time and so interest rates will fall and so will USD.
Trump wants a weaker $ for many reasons and he got his wish last year and likely will again this year too. Geopolitics will help the Dollar at times being still the main safe-haven currency of choice, but as long as the stock market goes up, Trump will be happy and the USD will go down.
Please check out the main events of the week below..
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