GBP trading near 1-month lows versus the majors

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waterman

Written by Dan Waterman
February 18th 2026
Investor sentiment turns positive today and helps the Pound from falling further..

UK headline inflation for January fell as expected to 3% (December's 3.4%).

The more important core inflation number fell to 3.1% and services inflation (key driver for the BoE on interest rates) fell to 4.4%, clearing the way for a highly likely interest rate cut next month.

Foundationally, the last 2-days have been 'net-negative' for the Pound.

UK bond yields are trading at one-month lows and GBP is trading at one-month lows versus the majors, exactly how these two are meant to be behaving after this week's results. This implies investors are preparing for a rate cut. 

Helping the Pound today though is a 'bounce-back' in global stocks.

It has been a very volatile month for global stocks as AI risks run riot across all industries creating uncertainty (a trend that will continue and accelerate from here). When investor risk sentiment turns negative, traders turn to safe-haven assets for protection, of which, GBP is not.

But today, most global stock indices are flashing blue and therefore the £ has received a bump in value. Even though there are reports that the US & Iran are close to military conflict. 

Further aid for Sterling may come on Friday, where the UK releases PMI data and retail sales. The former does historically improve Sterling on release and we are hoping more than expecting the same at release.