The pound is off to a positive start in 2026. Credit: Currencies Direct
Euro
EUR/GBP: Down from £0.87 to £0.86
EUR/USD: Up from $1.17 to $1.18
Trade in the euro has been erratic over the past month, with EUR exchange rates fluctuating in response to US President Donald Trump’s renewed territorial ambitions for Greenland.
Trump has claimed the US ‘needs’ Greenland for security reasons and suggested the US could use force to take the territory from Denmark, with his words given extra weight following the dramatic US military intervention in Venezuela in the first week of January.
With Greenland tensions beginning to dissipate, the focus may shift back to fundamentals, with the euro likely to appreciate if the Eurozone economy continues to show resilience.
Pound
GBP/EUR: Up from €1.14 to €1.15
GBP/USD: Up from $1.34 to $1.36
The pound is off to a positive start in 2026, rallying to multi-month highs against both the euro and the US dollar.
Sterling’s appreciation has been underpinned by stronger-than-expected UK economic releases, as well as signals from Prime Minister Keir Starmer that the UK will seek closer alignment with the EU.
The focus now turns to the Bank of England’s (BoE) first interest rate decision of the year. While the bank is widely expected to leave policy unchanged following its February meeting, GBP investors will be watching for any hints on when the BoE will next cut rates.
US Dollar
USD/GBP: Down £0.74 to £0.73
USD/EUR: Down from €0.85 to €0.84
A clear US dollar selling bias has emerged over the past couple of weeks, propelling USD exchange rates to multi-month lows.
This came as Trump’s latest tariff threats over Greenland and other foreign policy interventions triggered a ‘Sell-America’ trade, with investors pricing a higher risk premium on US assets.
Looking ahead, US foreign and trade policy uncertainty may continue to drive volatility in the US dollar in February, while US labour figures could also spark some notable movement.
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