ChamberFX Valuable Insights

These valuable insights are provided by Damon Ellam, International Payments UK, MoneyCorp. Damon is our regional representative and will be providing useful monthly FX forecasts to help chamber members with their currency strategies.

Good Morning

What to watch in February

 Bank of England – Thu 5^th: No rate change expected, but markets will focus on the vote split and updates to inflation, growth, and unemployment in the Monetary Policy Report. A higher unemployment peak could weigh on growth expectations.

• European Central Bank – Thu 5^th: Recent GDP data suggests a tentative pickup in Eurozone growth. However, the outlook remains sensitive to U.S. tariff policy and potential changes in the months ahead.

• US Federal Reserve Chair: A new Fed Chair nominee has now been named, with Governor Warsh expected to take over when Jerome Powell’s term ends in May. Markets will watch how his stance on interest rates and how it evolves over the coming months. This week also brings key labour market indicators, culminating in January’s non‑farm payrolls on Friday 6^th.

 Japanese Lower House Elections – Sun 8^th: Prime Minister Sanae Takaichi’s party is expected to secure a majority in the lower house, which may contribute to further JPY weakness. Takaichi is viewed as favouring expanded government spending and has strong support among younger voters. However, the prospect of increased fiscal stimulus – and the higher government debt required to fund it – has unsettled FX and bond markets. Investors see a single‑party majority as giving her more freedom to implement these policies compared with the current coalition setup.

• Despite calmer geopolitical conditions for now and denial of FX intervention rumours, any further US policy comments or rumours will remain a key market driver.

Please do let me know if I can help further.

Thanks,

Joe

February Newsletter

Risk Event Calendar

Below is a calendar of key economic and political events likely to influence FX markets in January. Keep an eye on these dates for potential market volatility.

Interest Rate Summary

Here's a summary of the current interest rates and future market expectations for major central banks.

European Central Bank:

• Deposit interest rate: 2.00%
• Next meeting date: 05/02/2026
• Next meeting expectation: Hold
• Expected interest rate on 30/06/2026: 2.00%
• Expected interest rate on 31/12/2026: 2.00%

Bank of England:

• Headline interest rate: 3.75%
• Next meeting date: 05/02/2026
• Next meeting expectation: Hold
• Expected interest rate on 30/06/2026: 3.50%
• Expected interest rate on 31/12/2026: 3.50%

US Federal Reserve:

• Headline interest rate: 3.75%
• Next meeting date: 18/03/2026
• Next meeting expectation: Hold
• Expected interest rate on 30/06/2026: 3.50%
• Expected interest rate on 31/12/2026: 3.25%

Contact

For further information and advice on Hull & Humber's ChamberFX, or for assistance with your currency strategy, please click here or contact Lorraine Holt at l.holt@hull-humber-chamber.co.uk or call 01482 324976.

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