British Pound Short-term Outlook: GBP/USD Breaks Range Lows

Author: Michael Boutros, Sr. Technical Strategist

Date: February 20, 2026

Summary

The British Pound (GBP) has experienced a significant decline, testing critical support levels around the 200-day moving average (200DMA). This reaction point is pivotal in determining whether the currency will continue to lose value or stabilize.

Current Market Conditions

GBP/USD has dropped over 3% from its yearly high, breaking below the February opening range. The price is currently hovering around the 200DMA, which is crucial for the near-term direction of the currency pair. A sustained move below this level could indicate a resumption of the downtrend, while holding above it may allow for a short-term rebound.

Technical Analysis

The recent decline has reinforced a bearish structure for GBP/USD. The immediate focus is on the reaction around the 200DMA, with a critical threshold at 1.3443. A daily close below this level would signal a continuation of the downtrend, targeting the 1.34 handle and potentially the 1.3339/51 region, which is significant for potential price inflection.

Market Sentiment and Economic Factors

The economic calendar is relatively light in the coming week, with notable events including President Trump’s State of the Union address and the US Producer Price Index (PPI) release. Traders are particularly attentive to Federal Reserve commentary following recent economic data, which may influence interest rate expectations. Currently, there is a 54% probability of a rate cut in June, down from 65% earlier in the week.

Conclusion

The GBP/USD has broken below the monthly range lows, and the focus is on the rebound from the 200DMA. Traders should be cautious, as rallies are expected to be limited to 1.3593 if the downtrend continues. Monitoring the weekly closes and upcoming economic events will be essential for determining the next steps in this currency pair.