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Market Insight 12-02-2026

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  • Market Insight 12-02-2026

Daily Currency Market Update – Thursday, 12 February 2026

Market Overview

The US Dollar remains under pressure ahead of Friday’s US CPI release, despite Wednesday’s stronger‑than‑expected Nonfarm Payrolls report. The USD Index trades near 96.80, struggling to regain traction as markets focus on the broader trend of soft consumption data and lingering concerns over Fed independence.

UK GDP data came in softer than expected, reinforcing expectations of a March BoE rate cut, though Sterling has held up reasonably well thanks to broad USD weakness. Political instability around Prime Minister Starmer continues to weigh on GBP sentiment.

The Euro is steady ahead of Friday’s Eurozone GDP and employment data, supported by a consistent message from ECB policymakers that policy is “in a good place.” AUD/USD trades near recent highs as Australian inflation expectations rise, while USD/CAD and USD/CHF remain under pressure amid a softer Dollar and firmer commodity and safe‑haven flows.

GBP/EUR

GBP/EUR ~1.1480

The cross trades muted as soft UK GDP data is offset by broader USD weakness and a steady Euro.

Drivers

  • UK GDP rose 0.1% MoM in December, matching expectations.
  • Q4 GDP grew 0.1% QoQ, undershooting the expected 0.2%.
  • Annual growth slowed to 1.0%, signalling loss of momentum.
  • Markets increasingly price a March BoE rate cut.
  • ECB policymakers maintain a steady tone; inflation seen “basically on target.”
  • Reuters poll: 66 of 74 economists expect ECB rates unchanged through 2026.

Outlook: GBP/EUR likely to remain range‑bound until Friday’s Eurozone GDP release.

GBP/USD

GBP/USD ~1.3664

Sterling climbs as weaker US jobless claims weigh on the Dollar despite soft UK GDP.

Drivers

  • Initial Jobless Claims rose to 227K, above expectations.
  • Wednesday’s NFP beat (130K vs 70K expected) overshadowed by downward revisions and weak underlying hiring trends.
  • UK GDP slowdown reinforces BoE easing expectations; markets price 70% chance of a March cut.
  • UK political uncertainty remains a headwind for GBP.

Outlook: GBP/USD direction hinges on Friday’s US CPI; political noise continues to cap upside.

EUR/USD

EUR/USD ~1.1883

The Euro snaps a two‑day slide as the Dollar struggles for traction.

Drivers

  • USD remains subdued despite firmer labour data.
  • DXY trades near 96.80, close to two‑week lows.
  • US jobless claims remain elevated; consumption data soft.
  • ECB expected to keep policy unchanged through 2026.
  • Eurozone GDP and employment data due Friday.

Outlook: EUR/USD remains supported while USD sentiment stays fragile; CPI will be decisive.

AUD/USD

AUD/USD ~0.7140

The Australian Dollar trades near three‑year highs as inflation expectations rise.

Drivers

  • Australian inflation expectations jumped to 5%, highest in nearly three years.
  • RBA tightening expectations strengthen; further hikes remain possible.
  • AUD supported by easing global risk concerns and hawkish RBA commentary.
  • Strong US jobs data limits USD downside but fails to reverse AUD strength.

Outlook: AUD/USD remains constructive above 0.7100; US CPI will determine whether the rally extends.

USD/CAD

USD/CAD ~1.3570

The pair holds steady as USD softness is offset by trade uncertainty.

Drivers

  • USD pressured by weak underlying labour trends and soft consumption data.
  • Oil prices stable near $64, supporting CAD.
  • USMCA uncertainty rises after reports Trump is considering withdrawal.
  • US House vote to end tariffs on Canada adds political complexity.
  • Markets price ~50 bps of Fed easing in H2 2026.

Outlook: USD/CAD bias remains lower; Friday’s CPI could trigger a break below 1.3500.

USD/CHF

USD/CHF ~0.7680

The Dollar declines as Swiss yields rise and safe‑haven demand persists.

Drivers

  • Swiss 10‑year yield rises to 0.32%, highest since December.
  • CHF supported by safe‑haven flows amid global uncertainty.
  • SNB expected to keep rates at 0%; inflation remains subdued.
  • US NFP beat tempered by downward revisions and weak trend growth.
  • Markets scale back near‑term Fed cut expectations but still see June as likely.

Outlook: USD/CHF remains pressured; Friday’s US CPI and Swiss CPI will guide next moves.

Final Summary

The US Dollar remains on the defensive ahead of Friday’s CPI, with soft consumption data and structural concerns overshadowing a stronger NFP headline. Sterling holds firm despite weak UK GDP and political instability, while the Euro benefits from a steady ECB stance and improving sentiment. The Australian Dollar trades near multi‑year highs on rising inflation expectations, and CAD remains supported by firmer oil prices and a softer USD. CHF continues to strengthen on rising domestic yields and safe‑haven demand. Friday’s US CPI and Eurozone GDP releases will be the key drivers for FX markets into the weekend.