The British Pound is trading around $1.36, facing mixed signals. Investors are awaiting key economic releases from the UK, including inflation, labor market data, and retail sales figures. Meanwhile, political uncertainty surrounding the Prime Minister adds to the currency’s headwinds. The Bank of England’s dovish stance and expectations of future rate cuts are also influencing the Pound’s performance.
- Sterling hovered around $1.36, below its late-January peak of $1.387.
- UK inflation is expected to ease to 3.0% in January.
- The unemployment rate is projected to remain unchanged at 5.1% in Q4.
- The UK economy expanded by just 0.1% in Q4 2025.
- Markets anticipate further monetary easing from the Bank of England.
- The Bank of England kept interest rates unchanged at 3.75% but adopted a more dovish tone.
- GBP/USD flat lines near 1.3650 ahead of UK and US data.
- UK political turmoil turns out to be a key factor behind the British Pound’s relative underperformance.
- Investors are pricing in a 50 basis points (bps) BoE rate cut this year.
- Concerns around UK Prime Minister Keir Starmer’s leadership intensified.
- The US Dollar (USD) languishes near a one-week low amid bets that the US Federal Reserve (Fed) will lower borrowing costs two more times this year.
- Market participants now look to the release of the US monthly Retail Sales, which, along with Fedspeaks, could provide some impetus later during the North American session.
- Focus will remain glued to the closely-watched US Nonfarm Payrolls (NFP) report on Wednesday and the latest US consumer inflation figures on Friday.
The Pound’s trajectory is currently influenced by a combination of economic data, central bank policy, and political factors. Upcoming economic releases will provide insights into the UK’s economic health, while the Bank of England’s future actions will impact investor sentiment. Political developments also contribute to the overall uncertainty surrounding the currency.