How is GBP faring versus the forecasts?

logo18year
Daily Market Report
Currency insight from
Excel Currencies
banner1

waterman

Written by Dan Waterman
February 26th 2026
UK bond yields fall to lowest level since December 2024..

Let's start with the headline above that UK bond yields have quietly fallen to their lowest level in 14-months.

This is significant news as the bond market was arguably the key driver in 2025 and caused all sorts of problems for the Chancellor and the Pound. I can guarantee if bonds were as high as they were for much of last year right now, we would see GBP weaker by around 2% and Reeves out of a job.

But, the economy has started 2026 very well and provided the Chancellor with plenty of spare cash (fiscal headroom) and looks to now be £20 billion+ away from hitting her own debt rules heading into the very low-key Spring statement next month.

It's a shame the mainstream media aren't talking about this, but that's media for you as we all know.

Over to the Gorton & Denton by-election now and the reason why it's high stakes is two-fold; 1 - Labour won easily at the 2024 election (as they have done for many years now) with 80% of voters backing a 'left' party. If the Greens split the green vote, Reform could win or the Greens could establish themselves firmly as the 'left' party to choose. 2 - The PM is under pressure and that's what sells..

Onto forecasts and GBP v USD is currently performing 3% higher than the median for Q1 (amongst the credible data-houses that we follow). We still have 1-month left of course, but this puts the pair in good stead for what most believe will be a strong end to the year.

GBP v EUR is exactly where the median forecast had it for Q1 and probably where the pair should be trading with all things considered.