Global Watch January 2026

The US economy has held up better than expected though employment growth has slowed and unemployment has edged up, prompting the Fed to lower interest rates over the final months of last year. We expect it to cut by a further 50bps in 2026, in line with current market pricing. We also see the Bank of England lowering rates by another 50bps this year as inflation continues to head lower, while we expect the ECB to remain on hold through 2026. The dollar has been fairly stable recently, notwithstanding some further narrowing of relative US interest rate differentials. We are lowering our forecast range for EURUSD to $1.14 to $1.21, though we see significant risks to this relating largely to US monetary policy. We continue to expect EURGBP to trade in a range of £0.84 to £0.89.

Bank of Ireland_Global Watch_January 2026