The British Pound Loses Momentum Amid Growing Economic Pressures
Author: Samir Al Khoury
Date: February 18, 2026
Current Status of GBP/USD
The GBP/USD currency pair recently peaked at 1.3869 on January 27, 2026, the highest since September 14, 2021, but has since retreated to 1.3496. Despite this decline, the pair is still up approximately 1% year-to-date and is currently trading around 1.3550.
Economic Data Overview
Recent economic indicators from the UK have shown weakness:
- The unemployment rate increased to 5.2%, the highest in five years, up from 5.1%.
- Wage growth, including bonuses, slowed to 4.2%, falling short of expectations and down from 4.6%.
- Industrial production contracted by 0.9%, worse than the expected -0.1% and the previous reading of 1.3%.
- GDP growth for the fourth quarter was a mere 0.1%, below the anticipated 0.2% but consistent with the prior reading.
Inflation and Monetary Policy
Inflation remains a concern, with the headline Consumer Price Index (CPI) rising 3.0% year-on-year, aligning with expectations but down from 3.4% previously. This persistent inflation, coupled with a weakening labor market, raises the risk of stagflation in the UK economy.
At its February 5 meeting, the Bank of England opted to maintain interest rates at 3.75%. However, a notable shift occurred as four out of nine committee members voted for a rate cut, contrasting with market expectations of only two members supporting such a move.
Market Reactions and Future Expectations
Given the current economic landscape, there is growing speculation that the Bank of England may consider cutting interest rates in the near future, which could negatively impact the British pound.
Additionally, UK government bond yields have sharply declined across all maturities, with the two-year gilt yield dropping to 3.56%, the lowest since August 2024, indicating increased investor demand for British bonds.
The US dollar's modest rebound against major currencies has further contributed to the downward pressure on the GBP/USD pair.
Technical Analysis
From a technical standpoint, a break below the pivot level at 1.3568 could lead to support levels at 1.3497, 1.3424, and 1.3353. Conversely, if the pair moves above the pivot level, it may target resistance levels at 1.3641, 1.3712, and 1.3785.
The Relative Strength Index (RSI) is currently around 48, indicating moderately negative momentum, while the MACD shows a bearish crossover, suggesting continued downside momentum for GBP/USD.