After the whiplash of 2022–2025, 2026 is shaping up as a different kind of FX year. The market’s focus is shifting away from how fast central banks move and toward how far policy paths diverge, how credible fiscal plans look, and whether politics injects a risk premium into the US dollar. Several major research houses and brokers broadly agree on one core theme: the dollar’s peak may be behind us, creating room for the euro to grind higher and for sterling to stay supported versus USD—though not necessarily versus the euro.
Below is a structured, research-based outlook for EUR/USD and GBP/USD in 2026, with a dedicated section on gold as the macro “pressure gauge” that often confirms (or challenges) FX narratives.
The macro setup for 2026: “post-peak USD” meets Europe’s fiscal pivot
1) The US dollar: still dominant, but no longer “untouchable”
Both MUFG and Rabobank frame 2026 as a year where US policy credibility becomes almost as important as the Fed’s dot plot. MUFG expects the dollar to weaken further in 2026 (about 5% on a DXY basis) as rate cuts extend and policy flashpoints return. Rabobank echoes the theme from a different angle: political pressure on the Fed, tariff risks, and cyclical slowdown can push investors toward more active hedging and diversification away from USD exposure.
IG’s outlook lands in a similar neighborhood: a DXY drift toward the mid-90s by end-2026, assuming the Fed can ease toward a more neutral stance without inflation re-accelerating.
Takeaway: If 2026 becomes a “dollar-down” year, EUR and GBP don’t need perfect domestic fundamentals to rise versus USD—they mainly need the US rate/credibility advantage to fade.
2) The eurozone: policy stability + Germany’s spending impulse (with France as the wildcard)
A key differentiator in EUR forecasts is Europe’s fiscal story. IG highlights Germany’s landmark spending plans as a meaningful tailwind to eurozone growth expectations, supporting EUR on the margin. MUFG also points to Europe’s improved fiscal stance and expects the ECB to be broadly on hold, which matters if the Fed is cutting.
But the “cap” on EUR strength is political fragmentation—especially France. IG explicitly flags French political dysfunction and risk premia in spreads as a constraint on how far and how fast EUR can run.
3) The UK: sterling’s 2026 story is as much politics as it is the BoE
For GBP, MUFG and Rabobank both stress BoE easing in 2026 and domestic political/fiscal risk as important headwinds—particularly versus EUR.
4) Risk sentiment: watch equities for “USD risk-off bursts”
One more variable: equity volatility. Forex.com’s “trade to watch” framing on the Dow Jones points to correction risk signals into 2026—important because sharp risk-off episodes can still trigger temporary USD strength (even in a broader weakening trend). Forex (Note: the full article content was not accessible due to a site restriction, so this point is based on the publicly available summary snippet.)
EUR/USD forecast for 2026: modest grind higher vs a higher-ceiling bull case
What the major forecasts are saying
Across the sources, you can map EUR/USD expectations into three tiers:
- Rabobank (12-month horizon): EUR/USD 1.18 (modest rise) with volatility and a slight upward bias later in 2026.
- IG (year-end 2026 base case): EUR/USD 1.19–1.21, driven primarily by USD weakness plus German fiscal support.
- MUFG (end-2026): EUR/USD 1.2400, consistent with their “post-peak USD” thesis and an ECB on-hold stance while the Fed cuts more than priced.
So, the base-case cluster sits around 1.18–1.21, while the higher-conviction bull case reaches into the 1.22–1.24 zone.
The three drivers that matter most
1) Rate differentials: Fed cuts vs ECB holding
IG expects the Fed to deliver one to two cuts toward a neutral zone, while the ECB remains paused around current levels—narrowing the yield advantage that supported USD. MUFG makes the same point with more force, explicitly stating the ECB staying on hold through 2026 would support a higher EUR/USD if the Fed cuts at least three times (and possibly more).
2) Europe’s growth impulse (Germany) vs Europe’s political drag (France)
Germany’s spending shift is a tangible pro-EUR story because it changes the growth differential narrative—especially if the US slows.
But France remains the “volatility valve”: if political dysfunction escalates or spreads widen sharply, EUR upside can stall even in a weak-USD environment.
3) Structural USD risk premium + reserve diversification
MUFG argues that ongoing concerns about Fed independence/policy flashpoints can keep the USD risk premium biased negative. Rabobank similarly notes more frequent hedging and diversification behavior, even as implied EUR/USD volatility falls.
Levels and scenarios to watch
IG’s technical framing is useful as a “map” of where the market might need to prove itself:
- Near-term range noted around 1.15–1.17
- Resistance around 1.19 (recent peak), then 1.22 (multi-year reference)
- Deeper support markers around 1.15, then 1.11 if the trade fails
Scenario framework (practical, not predictive):
- Base case (most consistent across sources): 1.18–1.21
- Bull case (USD downside + Europe tailwinds): 1.22–1.24
- Bear/risk-off case (France flare-up, tariffs, or equity shock): back toward 1.11–1.15
GBP/USD forecast for 2026: supported vs USD, but likely to lag EUR’s upside
Here’s the cleanest way to think about sterling in 2026:
- If USD weakens broadly, GBP/USD tends to be supported.
- But if GBP-specific risks (BoE cuts + politics) intensify, GBP can underperform—especially against EUR—meaning GBP/USD may rise less than EUR/USD.
MUFG and Rabobank: GBP weaker vs EUR, “okay” vs USD
MUFG expects EUR/GBP to move toward 0.9000 in 2026, citing BoE easing and renewed political/fiscal risks as headwinds for GBP. Importantly, MUFG still notes GBP should “hold up better” against USD if the dollar is weakening broadly.
Rabobank’s published FX table points to:
- EUR/USD rising to 1.18 (12 months)
- EUR/GBP rising to 0.89 (12 months)
Rabobank also expects BoE cuts to take the policy rate down toward 3.25% (assuming inflation falls), and sees leadership-challenge rumors weighing on sentiment.
Turning EUR/GBP forecasts into an implied GBP/USD range (useful for traders)
Neither MUFG nor Rabobank gives a clean single-number GBP/USD target in the excerpts above—but they do give EUR/USD and EUR/GBP guidance. Using basic triangular parity (GBP/USD ≈ EUR/USD ÷ EUR/GBP) gives a practical implied range:
- Rabobank 12-month implied GBP/USD: 1.18 ÷ 0.89 ≈ 1.33
- MUFG implied GBP/USD (using their EUR/USD 1.24 and EUR/GBP ~0.90): 1.24 ÷ 0.90 ≈ 1.38
Interpretation: A reasonable “research-consistent” GBP/USD zone for 2026 is roughly 1.30–1.38, where the top end requires sustained USD weakness and a relatively contained UK political risk premium.
GBP catalysts to monitor in 2026
- BoE cutting path: MUFG expects two or three 2026 cuts (policy rate nearer 3.00%) while Rabobank expects cuts toward 3.25%—either way, carry support for GBP likely fades.
- UK politics and fiscal narrative: MUFG explicitly warns that renewed leadership/fiscal concerns could trigger heightened GBP volatility.
- Risk sentiment: if a sharp equity correction hits, GBP can behave like a “risk currency” and wobble even if the medium-term USD trend is lower.
Gold in 2026: the “macro confirmation signal” for FX
Gold matters to EUR/USD and GBP/USD traders because it often reflects the same forces that drive the dollar:
- Real yields
- USD direction
- Policy credibility and geopolitical risk premia
IG’s gold outlook argues the rally is supported by structural demand (including central-bank reserve behavior) and macro tailwinds such as softer USD and lower real yields. It also cites a notable bank-forecast cluster: average 2026 projections around $4,500–$4,700, with an upper band toward $5,000 if conditions remain supportive (without requiring a crisis).
How this links back to EUR and GBP:
- If MUFG/Rabobank are right about continued USD softening and Fed credibility risks, gold strength would be consistent with EUR/USD drifting higher.
- The key risk to both “EUR up” and “gold up” trades is a hawkish surprise that pushes real yields higher—IG flags this directly as a gold headwind.
- In a sudden equity risk-off episode, gold can benefit as a hedge—even if USD gets a temporary safe-haven bid. That’s why gold is useful as a confirmation tool: if USD rallies but gold rallies too, the market may be pricing stress rather than a durable USD bull trend.
What traders should watch in 2026 (a practical checklist)
USD / Fed
- Labor-market cooling vs sticky inflation (determines how far the Fed can cut)
- Fed leadership and independence headlines (risk premium channel)
- Tariff/trade-policy flashpoints (inflation + growth mix; volatility)
EUR / Eurozone
- Implementation and credibility of German fiscal spending impulse
- France’s budget politics and spreads (tail risk to EUR upside)
GBP / UK
- BoE easing pace and UK inflation/wages (carry and growth narrative)
- UK political stability and fiscal perception (volatility risk)
Cross-asset
- Equity correction risk signals (can trigger short, sharp USD spikes)
- Gold behavior vs real yields (macro confirmation)
Conclusion: the 2026 base case, in one page
- EUR/USD: Most forecasts cluster around modest gains (Rabobank ~1.18; IG ~1.19–1.21), with MUFG outlining a higher-ceiling bull case toward 1.24 if Fed cuts + USD risk premium persist. Rabobank+2IG+2
- GBP/USD: Likely supported by broad USD weakness, but capped by BoE easing and UK political risk—suggesting an implied ~1.30–1.38 zone based on EUR/USD + EUR/GBP paths from Rabobank and MUFG. Rabobank Brand Portal+2MUFG Research+2
- Gold: If the “post-peak USD” narrative plays out, gold has a fundamental tailwind; IG notes 2026 bank forecasts clustering $4,500–$4,700 with upside toward $5,000 in stronger tailwind conditions. IG
Bottom line: 2026 looks less like a one-way trend year and more like a “trend-with-shocks” year—where a softer USD bias can coexist with episodic volatility from politics, trade policy, and risk sentiment.
