Currency news / February 5, 2026

Political pressures on GBP

3 min read Thanim Islam

Thanim IslamFebruary 5, 2026

Market snapshot:

Mandelson scandal raises risk premium
ECB and GBP set to hold on rates

Yesterday's currency recap

USD firmed against its G10 peers today, supported by higher long-end US yields after the Treasury’s quarterly refunding announcement that they will maintain their current coupon auction sizes over the next 3 months. US data was mixed: ADP payrolls pointed to continued, but moderating, job growth, while ISM services stayed expansionary, reinforcing the view that US activity remains resilient without forcing the Fed to rush back into easing. Overall, higher US yields gave the USD a short-term lift, but structural headwinds and relative policy divergence continue to cap upside.

In Europe, euro-area CPI eased again, underscoring disinflationary momentum and keeping pressure on the ECB to remain cautious, which weighed modestly on the EUR.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.15%	1.954
GBPCAD	-0.09%	1.8668
GBPCHF	-0.12%	1.0606
GBPDKK	-0.20%	8.6377
GBPEUR	-0.20%	1.1569
GBPJPY	0.19%	213.735
GBPNOK	0.50%	13.2497
GBPNZD	0.50%	2.2766
GBPSEK	0.82%	12.2934
GBPUSD	-0.36%	1.3645

*Daily move - against G10 rates as of 17:00 GMT, 02.02.26
** Indicative rates - interbank rates as of 17:00 GMT, 02.02.26

Key data points

Currency	Event	Period	Consensus	Previous
EUR	Interest Rate Decision	Feb	2.00%	2.00%
GBP	Interest Rate Decision	Feb	3.75%	3.75%
USD	Initial Jobless Claims	31st Jan	212,000	209,000

What we think

GBP is under pressure this morning, with renewed scrutiny of Starmer’s leadership and the Mandelson controversy lifting the UK political risk premium and souring sentiment. Combined with a broader risk-off mood and a firmer USD, this has driven GBPUSD back towards a one-week low.

Today’s BoE meeting is expected to deliver no change with a 7–2 or 6–3 vote split, but even a slightly hawkish tone may offer only limited GBP support given the political backdrop.

Markets are braced for todays ECB and BoE meetings, with both central banks widely expected to hold rates. At the ECB, all eyes are on Lagarde’s guidance, as inflation remains below target and the EUR’s strength complicates the outlook; any hint at future easing could weigh on the EUR.

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