Dollar Rebounds, Euro Steady, Sterling Softens as Data Takes Centre Stage.

• USD – Dollar Rebounds Slightly as Markets Reassess Fed Cut Timing

• EUR – Euro Holds Firm but Momentum Slows Ahead of Key ECB Week
  

• GBP – Sterling Softens as UK Data Disappoints and BoE Expectations Shift

USD:

The U.S. dollar opens the week with a modestly firmer tone after stabilising on Friday, as markets reassess how quickly the Federal Reserve may start easing policy in 2026. Last week’s softer U.S. labour data initially weighed heavily on USD, but traders have since scaled back the most aggressive rate-cut expectations, offering the dollar a short-term lift. Treasury yields are marginally higher this morning, helping the dollar recover some ground against major peers. With no major U.S. data releases today, attention will turn to several Fed speakers, who may attempt to guide market expectations ahead of next week’s CPI and the final Fed meeting of the year. For now, USD remains in consolidation mode, with risks balanced but leaning slightly toward upside if markets temper easing bets further.

EUR: 

The euro is trading close to recent highs against the dollar, supported by narrowing yield spreads and a broader narrative of eurozone stability relative to the U.S. However, momentum has softened slightly at the start of the week as investors turn cautious ahead of next Thursday’s European Central Bank meeting. While no policy changes are expected, the ECB’s updated economic projections — particularly on inflation persistence — will be closely watched for clues on the timing of its own 2026 rate path. With a quiet eurozone data calendar today, EUR/USD is likely to remain range-bound, driven mainly by USD sentiment. EUR’s underlying bias remains constructive, but a clear breakout will likely require ECB communication that supports medium-term stability.

GBP: 

Sterling begins the week on a softer footing after weaker-than-expected UK consumer spending and credit data on Friday reinforced concerns about sluggish domestic momentum. Markets are increasingly focused on whether the Bank of England could adopt a more dovish tone at its upcoming meeting, especially as fiscal uncertainty from the recent Autumn Budget continues to ripple through UK asset markets. GBP/USD has slipped back toward the lower end of last week’s range as the pound struggles to attract buyers in the absence of supportive data. Against the euro, sterling remains under pressure, with EUR/GBP drifting higher as investors favour the eurozone’s comparatively steadier backdrop. This week’s UK GDP estimate will be a key driver, with any downside surprise likely to trigger further GBP softness.