FTSE 100 and GBP/USD Forecast: UK Data Gives BoE March Cut a Further Boost
By Fawad Razaqzada, Market Analyst
Date: 17/02/2026
Market Overview
The FTSE 100 index has shown a slight increase, nearing last week's record levels, while the British pound has weakened. This movement follows the release of UK wage and jobs data, which suggests a potential interest rate cut by the Bank of England (BoE) in March, contingent on the upcoming inflation report. Analysts predict another rate cut in June and possibly more during the summer if inflation risks diminish. This outlook is expected to support the FTSE 100 in the long term while keeping pressure on the pound.
UK Labor Market Data
The latest labor market data indicates a slowdown in wage growth, with the three-month annual rate of average earnings dropping to 4.2% in December from 4.6% in November, significantly lower than the 5.9% recorded a year prior. The private sector also saw a decrease in pay growth, with figures falling from 3.6% to 3.4%. This decline is particularly evident in consumer-facing sectors such as hospitality and retail, likely due to the impacts of increased National Insurance and minimum wage costs from the previous year.
Despite these challenges, the overall employment situation remains stable, with only a slight decrease in private-sector employment and contained redundancy levels. The cooling wage pressures strengthen the case for further easing from the BoE, with traders now pricing in a 76% chance of a rate cut in March and expectations for two cuts by November.
FX Market Insights
The FX market has experienced a subdued start to the week, with the US dollar showing signs of weakness despite a stronger-than-expected jobs report. The dollar's struggles are attributed to softer inflation data, which has led to expectations of impending rate cuts by the Federal Reserve. This has provided some support for the pound, even as UK data remains lackluster.
Looking ahead, the upcoming Consumer Price Index (CPI) report is anticipated to provide further insights into the BoE's potential rate cuts, with expectations for a decrease to 3.0% year-over-year from 3.4% in December. Additionally, global PMI figures and US GDP data are set to be released, which will likely influence broader dollar sentiment.
GBP/USD Forecast
Despite the pound's general weakness, the GBP/USD pair's resilience appears more reflective of dollar weakness than genuine strength in the pound. Key support levels for GBP/USD are identified around the 1.3500–1.3565 range, with a potential break leading towards the 200-day average near 1.3400. Resistance levels are noted at 1.3700 and 1.3800.
FTSE 100 Technical Analysis
From a technical perspective, recent dip-buying has kept key support levels close, with the 10,400 – 10,375 area being significant in the short term. Below this, the focus shifts to 10,250 and then 10,000. On the upside, resistance is noted around 10,500, with the all-time high at 10,545 being a critical level to watch.
Company News
In company-specific news, shares of housebuilders Persimmon and Berkeley have risen due to improved mortgage affordability expectations linked to the anticipated rate cut. Conversely, Antofagasta shares have declined following disappointing earnings results.