Published: 27/02/2026 By ECAP
DOMESTIC POLITICS
The British Pound is tracking broadly in line with major banks’ forecasts but its outlook has grown more cautious, with 2026 projections revised lower. Political uncertainty has intensified pressure, as a closely watched Greater Manchester by-election fuels concerns over Prime Minister Keir Starmer’s leadership. Fragile sentiment, weaker hiring and slowing wage growth reinforce expectations of Bank of England rate cuts, leaving recent gains looking vulnerable.
The Euro remains broadly steady, supported by the European Central Bank’s confidence that inflation will stabilise at its medium-term target. Policymakers signalled rates will stay on hold, with decisions guided by incoming data and inflation risks. Upcoming German inflation figures could reinforce this stance. Overall, the euro’s outlook appears relatively stable, underpinned by policy consistency and easing price pressures.
The US Dollar climbed to a one-week high but lacks strong bullish conviction amid dovish Federal Reserve expectations. Softer US inflation data boosted bets on policy easing, with markets anticipating multiple cuts in 2026 and weighing concerns about the Fed’s independence. Traders await FOMC Minutes and the PCE Price Index, as the central bank’s outlook will shape near-term Dollar dynamics in coming trading sessions ahead.Data supplied by GC Partners