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Market Insight 06-02-2026

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  • Market Insight 06-02-2026

Daily Currency Market Update – Friday, 6 February 2026

Market Overview

The US Dollar eases back in early European trading after touching a two‑week high near 98.00 on Thursday. A softer tone in the Dollar follows weaker‑than‑expected US labour data and profit‑taking ahead of today’s University of Michigan Consumer Sentiment release.

Risk sentiment remains fragile. US equities fell more than 1% on Thursday, and futures point lower again this morning. JOLTS job openings dropped sharply to 6.54 million, well below expectations, reinforcing concerns about cooling labour demand.

The ECB and BoE both left rates unchanged on Thursday. The ECB maintained a steady tone, while the BoE surprised markets with a 5–4 vote split, signalling a higher‑than‑expected appetite for rate cuts. Sterling sold off sharply but is attempting to stabilise this morning.

GBP/EUR

GBP/EUR ~1.1520

The cross rebounds above 1.15 as the Euro weakens following disappointing German industrial data.

Drivers

  • BoE held rates at 3.75%, but the 5–4 vote split surprised markets, with four members backing a cut.
  • Bailey signalled disinflation is running ahead of schedule, reinforcing expectations of further easing.
  • ECB left policy unchanged; Lagarde downplayed Euro strength but maintained a steady tone.
  • German Industrial Production fell 1.9% in December, far worse than the expected 0.3% decline.

Outlook: GBP/EUR likely to remain volatile as markets digest the BoE’s dovish tilt and Eurozone growth concerns.

GBP/USD

GBP/USD ~1.3580

Sterling recovers part of Thursday’s losses as the Dollar corrects lower.

Drivers

  • GBP/USD fell nearly 0.9% on Thursday after the BoE’s dovish vote split.
  • The Dollar softens as weak US labour data boosts expectations of a March Fed cut.
  • FedWatch now shows a 22.7% probability of a March cut, up from 9.4% earlier this week.
  • JOLTS job openings dropped to 6.542m, a five‑year low.

Outlook: GBP/USD direction today hinges on US consumer sentiment and any BoE commentary from Chief Economist Huw Pill.

EUR/USD

EUR/USD ~1.1800

The Euro stages a mild rebound but remains capped by weak data and risk‑off sentiment.

Drivers

  • EUR/USD hit two‑week lows at 1.1765 before recovering.
  • German Industrial Production contracted 1.9%, adding to Eurozone growth worries.
  • ECB kept rates unchanged and signalled steady policy; Lagarde downplayed Euro strength.
  • Risk‑off sentiment supports the USD, limiting EUR upside.

Outlook: EUR/USD remains vulnerable; a weak US sentiment print could offer temporary relief.

AUD/USD

AUD/USD ~0.6977

The Australian Dollar recovers after recent losses as RBA tightening expectations grow.

Drivers

  • AUD initially weakened amid global equity selling and risk aversion.
  • RBA Governor Bullock reiterated that the economy is more capacity‑constrained than previously thought.
  • Markets now price an 80% chance of a May RBA hike and ~40 bps of tightening this year.
  • Australia’s trade surplus widened to AUD 3.37bn; exports rose 1.0%, imports fell 0.8%.

Outlook: AUD/USD remains sensitive to risk sentiment; RBA expectations provide a floor.

USD/CAD

USD/CAD ~1.3680

The pair edges higher as the USD firms and oil prices soften.

Drivers

  • WTI trades near $64, heading for a weekly decline after six weeks of gains.
  • Iran confirmed nuclear talks with the US, easing supply‑disruption fears.
  • Fed Governor Cook signalled reluctance to support further cuts without clearer disinflation.
  • Warsh’s nomination as Fed Chair reinforces expectations of slower easing.

Outlook: Canada’s employment data will be the key driver today; USD/CAD could test 1.3700 on strong US sentiment data.

USD/CHF

USD/CHF ~0.7765

The Dollar dips as dovish Fed expectations rise.

Drivers

  • USD/CHF softens as traders increase bets on a March Fed cut.
  • Weak US labour data (ADP +22K, JOLTS 6.54m) fuels dovish repricing.
  • SNB expected to keep rates at 0%; inflation remains subdued.
  • CHF supported by risk‑off sentiment and geopolitical uncertainty.

Outlook: USD/CHF likely to remain heavy unless US sentiment data surprises to the upside.

Final Summary

The US Dollar corrects lower after a strong week as weak labour data boosts expectations of earlier Fed easing. Sterling stabilises after the BoE’s dovish surprise, while the Euro remains pressured by soft German industrial data and cautious ECB messaging. The Australian Dollar recovers as RBA tightening expectations strengthen, and CAD trades cautiously ahead of today’s employment report. CHF remains supported by risk aversion. Market attention now turns to US consumer sentiment and Canada’s labour data for the next directional cues.