At the ECB meeting that ended last Thursday, the key rate was left unchanged at 2.15%. At the same time, most official forecasts were revised higher: GDP growth is now seen at 1.4% this year, slowing to 1.2% in 2026, and recovering to 1.4% in 2027. Inflation is projected at 2.1%, 1.9% and 1.8%, respectively, while core inflation (excluding energy and food) is expected at 2.4% in 2025 and 2.2% in 2026.

The improved preliminary estimates provided some support to the euro, but downside risks remain elevated. Traders remain concerned about intensifying global competition and the protectionist policies of many countries, primarily the United States. Today, markets are also digesting Germany’s November import price data: the monthly figure rose from 0.2% to 0.5% versus a 0.1% forecast, while the annual reading fell from –1.4% to –1.9%.

Spain also released its Q3 GDP figures: as expected, growth cooled from 0.8% to 0.6% quarter-on-quarter and from 3.1% to 2.8% year-on-year. In the US, Q3 GDP is due at 15:30 (GMT+2), with annual growth expected to slow from 3.8% to 3.2%, potentially reinforcing expectations of Fed easing in 2026. The Fed’s own projections still point to just one 25-bp cut, while markets are pricing at least two.

GBP/USD

Sterling is advancing against the US dollar, consolidating near early-October highs and testing 1.3484 for a breakout higher. Market activity remains subdued as many investors and forex traders gradually head into the Christmas holiday period, but volatility at the start of the week has stayed elevated due to a fresh batch of key UK macro data.

Traders noted that UK growth held steady in Q3 at 0.1% quarter-on-quarter and 1.3% year-on-year, although momentum could weaken in Q4 as conditions across global markets deteriorate. For example, UK manufacturers are facing elevated import tariffs not only from the US but also from the EU. In addition, Monday’s investment data helped underpin bullish sentiment: total business investment surged from 0.7% to 2.7% year-on-year and from –0.3% to 1.5% quarter-on-quarter.

The current account also improved, though it remained in deficit: the shortfall narrowed to –£12.067 billion from –£21.154 billion, while analysts had expected around –£21.3 billion. Investors are still focused on the latest Bank of England decision: as expected, the BoE cut the policy rate by 25 bp to 3.75% and did not rule out further easing ahead.

Inflation risks in the UK remain relatively high, which is why the decision passed by a margin of just one vote. In the US, Q3 GDP is due today at 15:30 (GMT+2), with growth expected to slow sharply from 3.8% to 3.2%, which could strengthen market expectations of additional Fed easing. In December, the Fed cut rates by 25 bp to 3.75% and kept next year’s rate path unchanged—still implying only one 25-bp cut across 2026. The Fed also upgraded its growth outlook on improving global prospects and expects lower inflation over the next few years. At 15:15 (GMT+2), ADP employment averages for the past four weeks will also be released (the prior reading showed +16.25 thousand jobs). The US labor market remains a key input for monetary policy decisions.

AUD/USD

The Australian dollar is rising against the US dollar, building on the strong bullish impulse from the previous session, which effectively erased last week’s hesitant downside move. The pair is testing 0.6670 for an upside breakout, marking fresh local highs since December 12.

Investors are focused on the minutes of the Reserve Bank of Australia’s (RBA) December meeting. Officials noted that inflation risks remain unstable and have recently shown restrained growth. The economy is still operating with excess demand, and it is not yet clear whether current financial conditions are tight enough to stabilize the situation.

Overall, the RBA reiterated that it may consider raising borrowing costs in 2026 if conditions warrant. Meanwhile, late last week markets paid attention to updated University of Michigan data: one-year inflation expectations for December were revised up from 4.1% to 4.2%, while five-year expectations held steady at 3.2%.

This somewhat reduced confidence in a rapid Fed easing cycle. In addition, the University of Michigan expectations index fell from 55.0 to 54.6 points, and consumer sentiment slipped from 53.3 to 52.9, while markets expected 53.4. Today at 15:30 (GMT+2), US GDP data is due, with annual growth expected to slow from 3.8% to 3.2%. Durable goods orders will also be published, helping assess inflation pressure: October orders are projected to decline by 1.5% after rising 0.5% in the prior month.

USD/JPY

The US dollar is weakening against the Japanese yen, trading near 156.00 and extending the corrective pullback that began early this week, when the pair retreated from local highs last seen on November 20.

The greenback remains pressured by familiar factors, including investor concerns about the Fed’s future easing plans—especially given that the Fed chair is set to change in May 2026. One of the leading candidates is White House economic adviser Kevin Hassett, known as a supporter of President Donald Trump’s policies. In any case, the Fed cut rates by 25 bp in December to 3.75%, while keeping projections for further easing unchanged.

US Q3 GDP is due today at 15:30 (GMT+2), with the annual rate expected to slow from 3.8% to 3.2%, which could be another signal for the Fed regarding potential easing in 2026. Official Fed projections still suggest just one 25-bp cut, while market participants expect at least two. Tomorrow at 01:50 (GMT+2), minutes of the Bank of Japan’s December meeting will be released; at that meeting the BoJ raised borrowing costs by 25 bp to 0.75% and did not rule out further tightening. On Friday at 01:30 (GMT+2), Tokyo-area inflation data for December will also be published.

XAU/USD

Gold continues to post new record highs. XAU/USD is testing 4480.00 for a breakout higher, partly driven by a weaker US dollar. Markets are increasingly pricing further Fed easing, while the ECB, the RBA and the BoJ have not ruled out rate hikes. In addition, demand for gold is rising amid persistent geopolitical risks. In particular, investors reacted actively to news of a naval blockade targeting Venezuela’s shadow fleet, which is primarily involved in oil transport.

Today at 15:30 (GMT+2), US Q3 GDP data will be released, with growth expected to slow sharply from 3.8% to 3.2%, potentially reinforcing expectations of further Fed easing.

In December, as expected, the Fed lowered its policy rate by 25 bp to 3.75% and kept next year’s guidance unchanged. The baseline scenario still implies only one additional 25-bp move across 2026. At 15:15 (GMT+2), ADP employment averages for the past four weeks will be published (the prior reading showed +16.25 thousand jobs). The labor market remains one of the key reference points for the Fed when choosing its policy path.