On January 20, the International Monetary Fund (IMF) once again raised its global economic growth forecast for 2026 on Monday. This revision stems from businesses and national economies gradually adapting to the recently moderated US tariff policies and the continued surge in artificial intelligence investments, which are boosting asset wealth and expectations for productivity gains. In its latest World Economic Outlook report, the IMF projected the global economic growth rate for 2026 at 3.3%, an upward revision of 0.2 percentage points from the October forecast last year; growth for 2027 is forecast at 3.2%, largely consistent with the estimated 3.3% for 2025. IMF Chief Economist Pierre-Olivier Gourinchas stated in an interview, "We find that global growth remains quite resilient." He added that the IMF's growth forecasts for 2025 and 2026 now exceed the predictions made in October 2024, prior to Trump's re-election. "So, in a sense, the global economy is moving past the trade and tariff disruptions of 2025 and is emerging from the situation, even surpassing our previous expectations," Gourinchas said.
Furthermore, economists at Goldman Sachs Group indicated that the latest threat of a 10% tariff by US President Donald Trump could potentially reduce the Eurozone's Gross Domestic Product (GDP) by approximately 0.1 percentage points. The Goldman Sachs team estimated that a 10% tariff would lead to a 0.1% to 0.2% decline in the real GDP of affected countries through the contractionary effects on trade channels. The team's further analysis suggested that under a scenario of gradual, reciprocal tariff escalation, Germany would bear the most significant impact, with its real GDP declining by about 0.2%; if comprehensive tariffs were implemented, the decline could widen to approximately 0.3%. The team, including Sven Jari Stehn, wrote in the report, "Should negative confidence shocks emerge in markets or financial market volatility intensify, the actual economic impact could far exceed current estimates."
Data to be watched today includes the UK November unemployment rate, UK November three-month average earnings including bonuses annual rate, the Eurozone January ZEW Economic Sentiment Index, and the Germany January ZEW Economic Sentiment Index.
USD Index The US Dollar Index trended lower yesterday, narrowly holding above the 99.00 mark, with the current exchange rate hovering around 99.10. Besides profit-taking exerting some downward pressure on the pair, trade uncertainty concerns sparked by US President Donald Trump's tariff threats were also a significant factor weighing on the index. However, diminishing expectations for interest rate cuts by the Federal Reserve limited the index's downside. Attention today is on the resistance near 99.50, with support located around 98.50.
EUR/USD The Euro moved higher yesterday, reclaiming the 1.1600 level, with the current exchange rate trading around 1.1640. In addition to short-covering providing some support, the weakening US Dollar Index under pressure from factors including trade uncertainty concerns was a key element supporting the Euro's rebound. Nevertheless, soft CPI data from the Eurozone during the session limited the pair's rebound potential. Focus today is on resistance near 1.1750, with support around 1.1550.
GBP/USD The British Pound edged higher yesterday, posting a slight daily gain, with the current exchange rate trading around 1.3420. Apart from short-covering offering some support, the softening US Dollar Index, pressured by its own corrective moves and trade uncertainty concerns, was the primary reason underpinning the Pound's recovery. Additionally, recently released positive UK economic data also provided some support for the pair. Today's focus is on resistance near 1.3500, with support around 1.3300.
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