Market Insight 26-02-2026

• Written by: Ian Morley
• 26/02/2026

Daily Currency Market Update – Thursday, 26 February 2026

Market Overview

Markets open cautiously as attention turns to US–Iran nuclear talks in Geneva, with investors reluctant to take large positions ahead of potential geopolitical headlines. The US Dollar struggles to extend Tuesday’s rebound, with the USD Index drifting just above 97.50 as risk appetite improves and equities consolidate after Wednesday’s tech‑led rally.

US data flow is mid‑tier today, with Initial Jobless Claims and the Kansas City Fed Manufacturing Index the main releases. Eurozone business and consumer sentiment surveys are due this morning, while traders continue to digest President Trump’s State of the Union remarks, which defended tariffs and criticised the Supreme Court ruling.

EUR/USD holds above 1.1800, GBP/USD trades near 1.3550, and AUD/USD stabilises above 0.7100 after Wednesday’s strong rally. USD/CAD softens toward 1.3670, while USD/CHF remains under pressure as safe‑haven flows favour the Swiss Franc.

GBP/EUR

GBP/EUR ~1.1450

The cross slips as UK political risks weigh on Sterling.

Drivers

• Today’s Gorton & Denton by‑election is seen as a key test for PM Starmer amid internal Labour tensions.
• A heavy Labour defeat could reignite leadership speculation and pressure GBP.
• Eurozone inflation fell to 1.7% YoY, a 16‑month low, reinforcing expectations of a more dovish ECB stance.
• Traders await German CPI on Friday for further clarity on the Eurozone inflation path.
• Lagarde speaks later today, though no policy shift is expected.

Outlook: GBP/EUR remains sensitive to UK political headlines; Eurozone inflation dynamics will shape direction into the weekend.

GBP/USD

GBP/USD ~1.3560

Sterling holds firm despite dovish BoE expectations as USD softens.

Drivers

• GBP/USD extends its winning streak to a fifth day as USD loses momentum.
• Trump’s SOTU speech added to uncertainty around US economic policy, weighing on the Dollar.
• Markets expect a March BoE rate cut, driven by weak labour data and cooling inflation.
• MPC member Taylor reiterated the need for 2–3 more cuts before reaching neutral.
• Bailey described a March cut as “a genuinely open question,” keeping GBP volatility elevated.

Outlook: GBP/USD remains supported above 1.3500; upside likely capped near 1.3580–1.3600 unless USD weakens further.

EUR/USD

EUR/USD ~1.1815

The Euro maintains a positive bias as trade uncertainty undermines the Dollar.

Drivers

• USD pressured by renewed turbulence around Trump’s tariff strategy.
• The US has implemented a 10% global levy, with plans to move to 15%.
• Markets fear retaliatory measures and supply‑chain disruption.
• ECB seen as done cutting rates, supporting EUR.
• Traders await final Eurozone CPI and German GDP revisions for confirmation of inflation trends.

Outlook: EUR/USD supported above 1.1800; further gains hinge on Eurozone data and Fed commentary later today.

AUD/USD

AUD/USD ~0.7140

The Australian Dollar reclaims a three‑year high on hawkish RBA expectations.

Drivers

• Australian CPI surprised to the upside:
  • Headline inflation steady at 3.8% (vs 3.7% expected).
  • Trimmed Mean CPI rose to 3.4%, above expectations.
• Markets price an 80% chance of a May RBA hike.
• RBA Governor Bullock reiterated that inflation risks remain elevated.
• USD softens as trade policy uncertainty persists.

Outlook: AUD/USD remains bullish above 0.7100; next resistance sits near 0.7160.

USD/CAD

USD/CAD ~1.3670

The pair drifts lower as tariff uncertainty weighs on USD and oil prices firm.

Drivers

• US Trade Representative Greer signalled tariffs could rise to 15% or higher for many countries.
• Tariff uncertainty undermines USD sentiment.
• Oil prices supported by geopolitical tensions ahead of today’s US–Iran talks.
• Canadian GDP due Friday (expected 0.1% MoM).
• US PPI also due Friday; a hot print could revive USD strength.

Outlook: USD/CAD remains soft; a break below 1.3650 would open the door to 1.3610.

USD/CHF

USD/CHF ~0.7720

The Dollar remains subdued as CHF benefits from safe‑haven demand.

Drivers

• USD pressured by uncertainty around US trade policy and Trump’s tariff escalation.
• CHF supported by geopolitical tensions and fading expectations of near‑term SNB cuts.
• Swiss inflation steady at 0.1%, keeping SNB policy unchanged.
• Swiss ZEW Expectations Index jumped to 9.8, signalling improving sentiment.

Outlook: USD/CHF likely to remain heavy; geopolitical headlines will drive intraday moves.

Final Summary

The US Dollar struggles to extend its rebound as risk appetite improves and markets focus on today’s US–Iran talks. Sterling remains firm despite dovish BoE expectations, while the Euro holds above 1.1800 as trade uncertainty weighs on the Dollar. The Australian Dollar outperforms after hotter inflation data, and CAD benefits from firmer oil prices. CHF remains supported by safe‑haven flows. Today’s US Jobless Claims and Eurozone sentiment data will guide intraday direction ahead of Friday’s key inflation and GDP releases.