Published: 20/02/2026 By ECAP
RESILIENCE TEST
The British Pound remains under pressure despite stronger-than-expected retail sales. January sales jumped 1.8% on the month, well above forecasts, showing consumers are still spending. However, earlier weak jobs data and softer inflation have strengthened expectations of a March rate cut from the Bank of England. Some analysts continue to favour further downside in Sterling, arguing UK rates will move closer to Eurozone levels in coming months.
The Euro is softer against the Dollar as US economic strength becomes harder to ignore. Markets are also weighing renewed expectations that the European Central Bank may cut rates later this year. While the Eurozone economy is stabilising, growth remains modest. Attention now turns to upcoming PMI surveys, which will give a clearer picture of business activity across the region.
The US Dollar is firm after solid US data and cautious signals from the Federal Reserve. Recent jobs figures beat expectations and policymakers have signalled they are not rushing to cut rates. Markets are also watching geopolitical tensions, which tend to support the Dollar. Focus now shifts to US growth data and the key inflation measure due later today, which could drive further movement.Data supplied by GC Partners