• [gtranslate]

Market Insight 19-01-2026

  • Home
  • Market Insight 19-01-2026

Daily Currency Market Update – 19 January 2026

Market Overview

Financial markets opened the week in a volatile mood as investors reacted to President Trump’s announcement of 10% tariffs on eight European countries, including the UK, effective 1 February, rising to 25% on 1 June if no agreement is reached on the US purchase of Greenland.

EU diplomats signalled readiness to retaliate with a previously‑suspended €93bn tariff package, intensifying transatlantic tensions.

The US Dollar, which had risen for three consecutive weeks, came under pressure, with the USD Index slipping toward 99.00. Gold surged to a fresh record high as geopolitical and trade uncertainty deepened.

US markets are closed today for Martin Luther King Jr. Day. Canada’s December CPI is the key data release in the North American session.

GBP/EUR

GBP/EUR trades steadily around 1.1530, with the Euro finding modest support from the ECB’s steady‑policy messaging.

Key drivers:

  • The ECB signalled it is near the end of its rate‑cutting cycle, maintaining a data‑dependent stance with no urgency to adjust policy.
  • Stronger‑than‑expected UK November GDP (+0.3% m/m) reduced expectations of a February BoE cut, offering underlying GBP support.
  • Traders await UK employment and CPI data later this week for clearer BoE direction.

Outlook: GBP/EUR likely to remain range‑bound until UK data begins to roll in. Strong UK prints could lift the cross.

GBP/USD

GBP/USD trades near 1.3400, recovering slightly after a bearish open.

Drivers:

  • The US Dollar weakened broadly as markets priced in higher political‑risk premia following Trump’s tariff threats.
  • The UK is among the countries targeted by the proposed 10% tariff, adding a layer of uncertainty for GBP.
  • UK PM Keir Starmer criticised the tariff threat, calling it “wrong” for NATO allies.
  • UK labour market data (Tuesday) and CPI (Wednesday) will be key for BoE expectations.

Outlook: GBP/USD remains sensitive to US–EU tensions and UK data. A soft US Dollar could support further upside.

EUR/USD

EUR/USD trades around 1.1620, trimming earlier gains.

Key factors:

  • The Euro initially benefited from USD weakness but retreated as risk aversion rose.
  • Markets await the final Eurozone HICP for December, expected to confirm easing inflation pressures.
  • Trump’s tariff threat triggered a risk‑off tone, with EU leaders preparing retaliatory measures.

Outlook: EUR/USD direction hinges on Eurozone inflation confirmation and broader risk sentiment.

AUD/USD

AUD/USD rises, supported by strong domestic and Chinese data.

Drivers:

  • Australia’s TD‑MI Inflation Gauge jumped to 3.5% y/y, with monthly inflation at 1.0%, the fastest since 2023.
  • China’s Q4 GDP grew 1.2% q/q, beating expectations, while industrial production rose 5.2% y/y.
  • USD weakness amid tariff‑driven uncertainty boosted AUD demand.

Outlook: AUD/USD remains constructive, with China’s momentum and domestic inflation supporting the Aussie.

USD/CAD

USD/CAD dips below 1.3900, reversing from Friday’s highs.

Key drivers:

  • Broad USD weakness following Trump’s tariff announcement.
  • Falling oil prices limited CAD gains, with WTI sliding to $58.70, more than 5% below last week’s peak.
  • Canada’s CPI (due today) expected to show –0.3% m/m, with annual inflation steady at 2.2%.

Outlook: USD/CAD direction will hinge on Canadian CPI. A soft print could cap CAD strength.

USD/CHF

USD/CHF plunges to ~0.7985, down sharply as safe‑haven flows favour the Swiss Franc.

Drivers:

  • EU–US tensions over Greenland boosted CHF demand.
  • EU leaders condemned US tariff threats, warning of a “dangerous downward spiral.”
  • SNB policy expectations remain steady, with inflation flat m/m and up 0.1% y/y.
  • Markets await SNB Chairman Schlegel’s remarks at Davos on Tuesday.

Outlook: USD/CHF may remain under pressure as geopolitical tensions dominate.

Final Summary

The week opened with heightened volatility as Trump’s tariff threats against Europe triggered broad USD weakness and record‑high gold prices. Sterling firmed against the Dollar but held steady versus the Euro. The Euro softened after mixed German data, while the Australian Dollar strengthened on robust domestic and Chinese figures. CAD gained modestly despite weaker oil, and CHF outperformed on safe‑haven demand.