# Roundup of the week: 30 January 2026 _Markets enjoyed a quieter week, but with a US naval force heading towards Iran, the calm may not last. Meanwhile, the consensus remains far too gloomy on UK growth - inflation is heading to 2% in April and yet the MPC will probably find some reason to keep rates at 3.75%. As for the "death of the dollar" headlines? We've heard it all before. Another Corporal Fraser moment._ Neil Woodford · 30 January 2026 · 8 min read ![Roundup of the week: 30 January 2026](https://cdn.sanity.io/images/v3acfbvo/production/6402f8c46e04945b97807d5483b2e4ccf083f4b4-1920x1280.jpg?w=1600&fit=max&auto=format) --- **If you think we have missed something you would like to discuss or would like to send in a question for next week's podcast episode,** [**send us an email**](mailto:hello@noisecancelling.co)**.** Thankfully this has been a slightly less fraught week for financial markets in which the normal slings and arrows of economics and company news were the dominant themes rather than tectonic shifts in geopolitics. Having said that, the pause may not last given the massive US naval force that is heading towards Iran and the Gulf of Oman as I write. President Trump has stated that "time is running out" for Iran to negotiate a deal on its nuclear programme and the oil price has risen significantly as speculation mounts that some form of military confrontation in the area between the US and Iran is inevitable. Given the recent circumstances and the brutal suppression of mass street protests in Iran in which it is estimated that 25,000 civilians were killed, the omens are not good. If conflict does erupt it's likely that for a period, regional tension will be reflected in a higher oil price. Longer term, if regime change in Iran is brought about, one would expect very weak energy prices to quickly follow and be sustained. ## Politics Although it has been a generally quiet week there have been some minor political stories that captured the media's attention. Perhaps the most significant of these was Keir Starmer's trip to China along with an entourage of corporate executives bearing "gifts". Not much of economic significance has emerged from the trip seemingly other than a slightly bizarre undertaking to attempt to control the supply of Chinese outboard engines to cross-Channel people smugglers and an agreement to allow visa free travel to China for up to thirty days which will be very welcome to regular travellers to the country. ## Economics It's also been a slightly quieter week for major economic news. Yesterday we learned that the Fed would be keeping rates on hold, which was what was expected, and today US labour market data was pretty much bang in line with consensus expectations too. Other than that, very little else has attracted any attention. ## UK I have been musing once again about the outlook for the UK economy and wanted to mention a few important points, some of which I must apologise for repeating here but they are quite important. The first is that some data I have bumped into today, once again thanks to my favourite economist, encapsulates the challenge confronting the UK economy. In real terms, since just before the pandemic, (2019) real government spending per head in the UK has increased by £2,500, but real GDP per head has increased by only £500. In other words, the pandemic and the establishment's response to it has clearly blighted the economy and left it with a very challenging legacy of bloated expectations in relation to what the state should be doing and what it should pay for. This mismatch between what is affordable and appropriate and prevailing spending growth is a legacy that must, sooner or later, be confronted by our political masters. I doubt whether the current government has the will to grasp this particular nettle, but one hopes, for the sake of all our futures, that the next one will. After that dose of economic realism, some more uplifting news. It appears that water bills will be going up by 5.4% in April. This additional inflation busting increase might initially be seen as horrific. However, last April water bills rose by 26% and so the base effect will be very disinflationary. That combined with what we already know about electricity bills, combined again with what we know about gas prices which are very weak, means that inflation in April may well be even lower than I had first thought. Which of course feeds into the MPC's rate decision next week. The consensus view is that the committee will keep rates on hold. My view is that this would be yet another mistake. Inflation will very soon, in a matter of weeks, be at the MPC's target of 2%, quite why rates are required to remain at 3.75% is beyond me. As for what this means for the growth outlook, once again I am perplexed. Apparently, the economic consensus is that growth this year will only reach 1.1%. Berenberg are especially bearish at 0.7%, KPMG is at 0.8% and the esteemed Oxford Economics is at 0.9%. My view is that these forecasters are all underestimating the strength of consumer spending in 2026 and will all be wrong, as will the MPC both on inflation and growth. In fact, next week I expect the MPC to both reduce its inflation and raise its growth forecasts. One might think that this would be reason enough to cut rates but there is no knowing what convoluted academic justification the MPC members might come up with to justify doing nothing. For the record, my own view is that UK GDP growth in 2026 will be between 1.5 and 2% and that inflation will fall to 2% in April and stay there, or thereabouts for the rest of the year. ## Markets Before touching on what has been a busy week for globally significant company results, I should first mention the most talked about issue of the week, which is US dollar weakness. To put this issue into context, over 2025 the US dollar index, which measures the currency against a basket of leading international currencies, fell slightly more than 9% and has so far fallen another 2% in 2026. Some might argue that this is hardly earth shattering given the long prior period of previous dollar strength as shown below. US Dollar Index But, as usual, many others are suggesting that this is very significant and marks the end of the dollar standard and is a lead indicator of stress in financial markets represented by growing government debt and heightened geopolitical risk. This view is also linked to the recent very strong rise in the price of gold and other commodities. I am not going to attempt here to cover every aspect of this story not least because it's fraught with speculation and guess work but will give a very brief summary of my own views. As the chart above shows clearly, over the last twenty years there have been a number of dollar index setbacks and on each occasion, I can remember "experts" telling me that this was the end of the dollar standard and the rise of, variously, the Euro, the Reminbi and periodically gold and crypto. None of these prognostications came to pass and as the chart shows, the US dollar continued to appreciate against other currencies not least because the US economy has continued to significantly outperform most of its peers. Having said that, I do understand why, in a fractious geopolitical world in which President Trump is challenging established norms, concern about what this all means for the world's reserve currency has increased. However, it appears to me that as long as the US economy continues to show a clean pair of heels to the Eurozone, Japan and most other developed economies of the world, it is hard to see how its dominance and importance to trade, commerce and financial markets will diminish. It is also hard to see how China's currency can replace or rival the global relevance and dominance of the US dollar not least because of China's political structures, and state control over critical parts of economy and its central bank. Meanwhile President Trump has indicated that he is pretty relaxed about US dollar weakness and given his MAGA policy priorities, one can see why. A weaker dollar makes US imports more expensive and its exports more competitive, something that is totally aligned with his trade and tariff policies. I see that Scott Bessent, the US Treasury Secretary has today said that the US is still pursuing a strong dollar policy, which is what you would expect someone in his position to say, but my guess is that his boss has spoken more authentically on this matter. Finally, suggestions that gold might replace the dollar as the primary reserve currency are pretty fanciful in my opinion. Only about 220,000 metric tonnes of gold have been mined in human history and so the total value of gold is tiny, even at this price, compared with total value of global government debt and money supply. Consequently, a return to the gold standard or its modern-day equivalent would result in a massive global liquidity and economic crisis or, a totally destabilising explosion in its price. For all these reasons this story strikes me as yet another "we're all doomed" Corporal Fraser moment and should not be given too much credibility. ### Company results As for notable results this week, there have been quite a few. Semiconductor related businesses including SK Hynix and ASML both delivered consensus busting numbers reflecting the unprecedented impact of the AI industrial revolution on the demand for memory chips and the equipment needed to manufacture them. STMicro also released its full year numbers, and although the share price fell on the day, the Q4 numbers themselves were quite a bit better than was expected as was the guidance for 2026. In summary the personal electronics, communications and computer peripherals and industrial markets performed well but its automotive division came in below expectations. Elsewhere in the results announcements from Meta and Microsoft, once again it was the expanding AI spending plans that seemed to unnerve investors. Microsoft's share price fell quite steeply on the day as investors consumed the fact that its AI capex reached $37.5bn in the second quarter, which was up 66% YOY and about $1bn more than was expected, alongside the fact that its cloud revenue was "only" up 38% - which sounds spectacular but apparently needed to be better than expectations to outweigh the higher capex disappointment. Meta on the other hand also announced a blow-out AI capex number ($115-$135bn in 2026) but its earnings beat expectations as did its guidance, and its confident message in relation to how AI will transform the company's productivity all seemed to reassure investors. In the UK EasyJet announced a slightly higher than expected Q1 loss but guided to strong summer sales following record bookings in January. The company is on target to reach its stretch goal this year following a 7% increase in capacity and a robust performance from its holidays business. Lloyds Banking Group kicked off the bank reporting season with a very strong set of numbers which importantly included a promise to return £1.75bn in buybacks this year which will be reviewed at the interims. Given the strength in the underlying business and its capital generation, that number, according to some leading analysts, could reach £3bn in 2026 which is about 5% of the bank's market capitalisation. ## What to Look Out for Next Week There is quite a busy calendar of economic announcements next week including labour market and PMI data in the US and perhaps most importantly in the UK, the MPC rate decision which will be announced on Thursday. There will be loads of corporate results in Europe, the UK and the US as well. Finally, the world's financial and commodity markets, along with everyone else, will also be watching events in Gulf very closely too.