UK Economic Data and GBP Impact💱 Forex•GBP/USD

UK Inflation Cools, Rate Cut Bets Weigh on Pound

February 18, 2026, 06:02 PM154 words10 sources
GBP/USD
UK Inflation Cools, Rate Cut Bets Weigh on Pound

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Recent UK economic data paints a picture of cooling inflation and a weakening labor market, intensifying expectations of Bank of England (BoE) interest rate cuts. January's CPI fell to 3% year-over-year, in line with forecasts, while employment increased by a smaller-than-expected 28.6K, pushing the unemployment rate to 5.2%. Wage growth also slowed. While the CPI print was slightly stronger than anticipated in some core measures, particularly services, most analysts, including MUFG, maintain the BoE is on track for a 25 basis point cut in March. The BoE’s February meeting already saw four members voting for an immediate cut. This dovish shift has pressured the Pound Sterling (GBP), with GBP/USD trading volatile around 1.3560 and facing technical bearish signals, potentially targeting 1.3400. The Bank of Japan’s potentially hawkish stance is also contributing to GBP/JPY declines. Market focus now shifts to the FOMC minutes for signals on US rate cuts, which could further influence currency movements.

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This article is based on analysis of 10 source articles from our news database.

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