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Market Insight 18-02-2026

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  • Market Insight 18-02-2026

Daily Currency Market Update – Wednesday, 18 February 2026

Market Overview

Markets open the mid‑week session with a cautious tone as investors digest cooler UK inflation and prepare for a heavy US data slate culminating in tonight’s FOMC Minutes.

UK CPI eased in line with expectations, reinforcing the case for a March BoE rate cut, while the US Dollar holds modest gains above 97.00 ahead of US industrial production, housing data, and durable goods orders.

GBP/EUR

GBP/EUR ~1.1460

The cross holds steady after UK inflation cools as expected.

Drivers

  • UK CPI fell to 3.0% YoY, down from 3.4%, matching expectations.
  • Core CPI eased to 3.1%, reinforcing BoE easing expectations.
  • Monthly CPI fell 0.5%, in line with forecasts.
  • ECB expected to hold rates through 2026; potential hikes only from 2027 onward.
  • Eurozone flash PMIs and UK Retail Sales on Friday will be the next major catalysts.

Outlook: GBP/EUR likely to remain range‑bound until Friday’s data releases provide clearer direction.

GBP/USD

GBP/USD ~1.3560

Sterling turns volatile as UK inflation cools and markets await FOMC Minutes.

Drivers

  • UK CPI matched BoE projections for Q1, reinforcing expectations of a March rate cut.
  • GBP/USD trades choppily around 1.3560 after Tuesday’s sharp decline.
  • USD slightly firmer ahead of FOMC Minutes and US data.
  • UK Retail Sales and flash PMIs due Friday will drive the next leg for GBP.

Outlook: GBP/USD remains vulnerable; a dovish FOMC could stabilise the pair, while strong US data risks a retest of 1.3510.

EUR/USD

EUR/USD ~1.1835

The Euro softens as political noise adds to existing macro pressures.

Drivers

  • Reports suggest ECB President Lagarde may step down early; ECB denies any decision.
  • EUR/USD recovery attempts capped below 1.1850.
  • German and Eurozone sentiment data remain weak.
  • Markets await FOMC Minutes and US GDP/PCE later this week.

Outlook: EUR/USD remains pressured; a break below 1.1820 risks a move toward 1.1780.

AUD/USD

AUD/USD ~0.7050–0.7070

The Australian Dollar drifts lower ahead of key domestic data and FOMC Minutes.

Drivers

  • RBA minutes highlighted persistent inflation and stronger‑than‑expected data.
  • RBA maintains a hawkish bias; further hikes remain possible.
  • Traders await Australia’s Wage Price Index (Wednesday) and labour data (Thursday).
  • USD steadies as markets await Fed guidance.

Outlook: AUD/USD likely to remain range‑bound until Australian jobs data and US PCE provide clarity.

USD/CAD

USD/CAD ~1.3645

The pair strengthens as softer Canadian inflation and lower oil prices weigh on CAD.

Drivers

  • Canada CPI eased to 2.3% YoY, below expectations.
  • Oil prices soften amid easing US–Iran tensions.
  • USD supported by cautious sentiment ahead of FOMC Minutes.
  • Markets expect BoC to cut rates again, pressuring CAD.

Outlook: USD/CAD remains supported; a dovish FOMC could cap gains, while strong US data may push the pair toward 1.3680.

USD/CHF

USD/CHF ~0.7700

The pair edges higher but remains trapped in a tight range.

Drivers

  • CHF remains firm despite weak Swiss CPI last week.
  • SNB easing speculation persists but no action expected near‑term.
  • USD consolidates ahead of FOMC Minutes and US GDP/PCE.
  • Swiss GDP returned to growth in Q4 (+0.2%).

Outlook: USD/CHF likely to remain range‑bound until US data provides a clearer catalyst.

Final Summary

UK inflation cooled as expected, reinforcing expectations of a March BoE rate cut and keeping Sterling volatile. The Euro remains pressured by weak sentiment data and political noise around ECB leadership. The US Dollar holds modest gains ahead of a heavy US data slate and tonight’s FOMC Minutes. AUD/USD softens ahead of key Australian wage and labour releases, while CAD weakens after softer CPI and lower oil prices. CHF remains firm on safe‑haven demand. Today’s US data and FOMC Minutes will set the tone for FX markets into the second half of the week.