GBP Dragged Down by BoE Repricing, Focus Shifts to Inflation
Pressure on the pound is expected to remain in place until next week's UK inflation release (February 18, 2026), as markets continue to adjust expectations for a Bank of England (BoE) interest rate cut. In recent trading, GBP/USD hovered around 1.3610, down around 0.09% from the previous session—reflecting sterling's continued struggle to secure a consistent rebound.
The main source of weakness came from the BoE's repricing of its policy direction following its relatively dovish February meeting. The BoE held interest rates at 3.75% in a tight vote (5-4), leaving the market increasingly open to a cut scenario at its next meeting on March 19, 2026—and expectations of a cut are likely to strengthen if CPI data again shows disinflation is on track after the previous temporary increase.
Beyond interest rates, sterling also carries a risk premium from domestic political dynamics. Although tensions have eased, recent episodes of political uncertainty have quickly hit the GBP and made investors more selective in adding to their positions. This combined effect of a more dovish BoE and still sensitive politics is what has caused sterling to easily lag behind currencies supported by more aggressive policy narratives.
Source: Newsmaker.id
