• [gtranslate]

Market Insight 05-02-2026

  • Home
  • Market Insight 05-02-2026

Daily Currency Market Update – Thursday, 5 February 2026

Market Overview

Markets are subdued in early European trading as investors await a major double‑header of central‑bank decisions. Both the Bank of England and the European Central Bank will announce policy outcomes today, with no change in rates expected from either institution.

The US Dollar strengthened on Wednesday despite mixed data. ADP private payrolls rose just 22K, well below expectations, but the ISM Services PMI held steady at 53.8, signalling robust activity in the largest sector of the US economy. The USD Index trades firm around 97.70 this morning.

The US Bureau of Labor Statistics confirmed that the delayed Nonfarm Payrolls report will be released next Wednesday (11 February), with CPI moved to 13 February.

EUR/USD trades around 1.1800, GBP/USD softens to 1.3625, and AUD/USD remains below 0.7000 after Wednesday’s correction.

GBP/EUR

GBP/EUR ~1.1500

The cross moves lower as Sterling underperforms ahead of the BoE decision.

Drivers

  • BoE expected to hold Bank Rate at 3.75%, with a likely 7–2 vote split.
  • MPC members Dhingra and Taylor expected to push for another 25 bp cut.
  • BoE to reiterate its “gradual downward path” for policy.
  • UK CPI re‑accelerated in December, complicating the case for further near‑term easing.
  • ECB also expected to hold rates at 2%, with officials signalling no need for adjustments unless inflation or employment shifts materially.
  • Eurozone HICP slowed to 1.7% in January, in line with expectations.

Outlook: GBP/EUR likely to remain sensitive to policy tone from both Bailey and Lagarde.

GBP/USD

GBP/USD ~1.3625

Sterling trades lower as the Dollar extends its recovery.

Drivers

  • Markets expect the BoE to hold rates today; guidance will be key.
  • The DXY hit a fresh one‑week high at 97.82.
  • Fed expected to keep rates unchanged in March and April.
  • US JOLTS Job Openings (expected 7.2m) and Initial Jobless Claims will guide USD sentiment.

Outlook: GBP/USD remains vulnerable to a hawkish‑leaning BoE or stronger US data.

EUR/USD

EUR/USD ~1.1800

The Euro trades flat after bouncing from two‑week lows.

Drivers

  • German Factory Orders surged 7.8%, beating expectations.
  • Eurozone Services PMI disappointed, with activity slowing to a four‑month low.
  • ECB expected to hold rates; any dovish shift could pressure EUR.
  • US data mixed: ISM Services strong, ADP weak.

Outlook: EUR/USD remains defensive ahead of the ECB press conference.

AUD/USD

AUD/USD ~0.6970

The Australian Dollar extends losses as the USD strengthens and Australia’s trade data underwhelms.

Drivers

  • Australia’s trade surplus widened to AUD 3.37bn, but import weakness weighed on sentiment.
  • Exports rose 1.0%, imports fell 0.8%.
  • China’s Services PMI improved to 52.3, offering limited support.
  • RBA’s hawkish stance remains intact, with markets pricing ~40 bps of further tightening this year.

Outlook: AUD/USD remains pressured unless risk sentiment improves or USD momentum fades.

USD/CAD

USD/CAD ~1.3680

The pair rises as the USD strengthens and oil prices soften.

Drivers

  • WTI slips below $63.50 after Iran confirmed nuclear talks with the US.
  • Fed Governor Cook signalled reluctance to support further cuts without clearer disinflation.
  • Warsh’s nomination as Fed Chair reinforces expectations of slower easing.
  • CAD weighed by geopolitical uncertainty and softer commodity prices.

Outlook: USD/CAD could test 1.3700 if US data surprises to the upside.

USD/CHF

USD/CHF ~0.7780

The Dollar gains ground as markets digest Fed leadership signals.

Drivers

  • Warsh’s nomination supports expectations of a more cautious Fed.
  • Trump’s comments on rate cuts revive concerns about Fed independence.
  • US–Iran talks scheduled for Friday could reduce safe‑haven demand for CHF.
  • SNB remains concerned about soft inflation but unlikely to adjust policy soon.

Outlook: USD/CHF may remain choppy, with geopolitical headlines driving intraday moves.

Final Summary

Market attention is firmly on today’s BoE and ECB decisions, with both central banks expected to hold rates but deliver guidance that could shift currency direction. The US Dollar remains supported by firm services activity and expectations of slower Fed easing, despite weak ADP data. Sterling trades lower ahead of the BoE, the Euro is steady ahead of the ECB, and the Australian Dollar continues to correct after Tuesday’s RBA‑driven rally. CAD and CHF remain driven by oil prices and geopolitical developments, while traders await US JOLTS and jobless claims for the next USD catalyst.