Currency news / January 23, 2026

Sentiment positive as geopolitical tensions ease

3 min read Thanim Islam

Thanim IslamJanuary 23, 2026

Market snapshot:

USD loses out on positive mood
UK political headlines highlights GBP sensitivity

Yesterday's currency recap

FX markets have shifted back into a clear risk-on as geopolitical tensions ease. Trump’s reversal on European tariff threats has helped calm nerves, weighing on USD. AUD has performed well on this basis, reaching its strongest level versus GBP since February 2025, supported by a sharp upside surprise in employment and a lift in rate hike expectations. While RBA repricing may be somewhat aggressive (markets pricing in 50bps worth of hikes), AUD continues to benefit from reduced geopolitical exposure and a steadier China backdrop.

We also had several headline relating to Andrew Burnham yesterday, suggesting he may have a new route to parliament after MP Andrew Gwynne reached a settlement with the Commons that would allow him to retire and call a by-election. GBP was knocked following this but then recovered after sources suggest Labour would block electing Burnham – highlighting the sensitivity to political headlines ahead of the local election in May.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	-0.65%	1.9729
GBPCAD	0.17%	1.861
GBPCHF	-0.24%	1.0660
GBPDKK	-0.04%	8.5807
GBPEUR	-0.04%	1.1489
GBPJPY	0.45%	213.528
GBPNOK	-0.48%	13.3135
GBPNZD	-0.57%	2.2849
GBPSEK	-0.52%	12.1657
GBPUSD	0.42%	1.3487

*Daily move - against G10 rates as of 06:00 GMT, 23.01.26
** Indicative rates - interbank rates as of 06:00 GMT, 23.01.26

Key data points

Currency	Event	Period	Consensus	Previous
EUR	Manufacturing PMI	Jan	49.20	48.80
EUR	Services PMI	Jan	52.60	52.40
EUR	Composite PMI	Jan	51.90	51.50
GBP	Manufacturing PMI	Jan	50.60	50.60
GBP	Services PMI	Jan	51.70	51.40
GBP	Composite PMI	Jan	51.50	51.40
USD	Manufacturing PMI	Jan	52.00	51.80
USD	Services PMI	Jan	52.90	51.50
USD	Composite PMI	Jan	53.00	52.70

What we think

GBP got a boost this morning after retail sales came in higher than expected for the month of December.

Flash PMI releases today will provide an early read on January activity across the major economies, with markets focused on whether the recent improvement in risk sentiment is feeding through to real economy momentum. In Europe and the UK, attention will be on services resilience and whether manufacturing remains stuck in contraction, a key input into near-term ECB and BoE expectations. In the US, PMIs will be watched for confirmation that growth is moderating but still expansionary, consistent with a soft-landing narrative. Overall, modest improvements in services and stabilisation in the manufacturing would reinforce the current risk-on tone, while downside surprises – particularly in Europe – could quickly reintroduce growth concerns.

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