Sterling loses 1% in February versus EUR & USD

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waterman

Written by Dan Waterman
February 27th 2026
AI fears grip the market once again..

It's been a bad 24-hours for the Pound..

When the US markets opened yesterday, global stocks fell as investors continue to panic about the big tech companies' aggressive capital spending plans (even though companies like Nvidia continue to report unbelievable earnings). This theme has been been ongoing for many months now and it's unfortunately here to stay throughout 2026 folks.

Why does this affect GBP?

Remember, Sterling is not considered a safe-haven currency, that means when investor sentiment is negative, money pulls away from the more 'riskier' assets such as anything to do with £. Yesterday, the pound lost 0.3% against the 'safer' currencies like the EUR & USD

It has been a very fruitful bull run for stocks the last 3-years and historically speaking, a correction is due. This, plus what AI could do to jobs and companies has investors extremely nervous and so 2026 is set for a hyper-volatile stock market which is bad news for GBP.

This morning, Labour lost the Gorton & Denton by-election. A lot has been written about this subject and only time will tell if it actually means anything to the PM's position. It has to be said that the facts here don't bode well for Labour at the local elections in May;

- Labour had held the seat since 1931
- The seat was considered a top-10 safest seat
- Labour won by an absolute landslide only 2-years ago
- Reform gained 14% more of the vote share compared to 2024
- The Green's have just won their first ever by-election
- Hannah Spencer becomes the first ever Green MP in the north of England

GBP is down 0.2% today because the result is net-negative as far as investors are concerned. Political uncertainty in the UK hurts the Pound considerably. With the rise of the 'left' here and the election polls strongly favouring the 'right' (Reform), where does that leave the current government and of course the Tories who have been in power over recent years?

The last 24-hours caps off a poor month overall for the Pound.