Post #15590

Sterling Mixed with Thin Trade and Limited Catalysts Sterling is starting 2026 quietly, trading mostly sideways against both the dollar and the euro in thin holiday conditions. GBP/USD is hovering around 1.349, just off last week’s three-month high, with no fresh catalysts pushing price in either direction. The recent tone has been shaped by easing concerns around the UK budget and BoE policy. While the BoE cut rates in a narrow vote last month, officials signaled the pace of easing could slow in 2026 — and markets have taken that seriously. Traders aren’t fully pricing another cut until June, with only ~40bps of easing priced for the year. Looking ahead, the path for sterling still hinges on the data. The labor market is softening and growth remains sluggish, but recent PMI data suggests manufacturing is stabilizing, not rolling over. The next real catalyst comes with the services PMI, which will help clarify whether the broader economy can regain momentum. - Alan