The BoE kept rates at 3.75% in February after a 5–4 vote. Four members supported a 25-basis-point cut. UK data this week strengthened the case for easing and kept a March cut on the table. Unemployment rose to 5.2%, and payrolls fell by 30K, according to Tuesday’s labour report. Wednesday’s CPI showed headline inflation falling to 3%. The Retail Price Index also cooled to 3.8%.

Bank Policy And Market Reaction

In the US, the FOMC minutes said growth was “solid” and warned that progress toward the 2% inflation goal may be “slower and more uneven.” Some members said rates could still rise if inflation heats up again. GBP/USD fell to around 1.3434, extending its drop from the late-January high of 1.3869. The pair moved below the 50-day EMA at 1.3520 and is now near the 200-day EMA around 1.3420. Support is near 1.3415 and 1.3344. Resistance is at 1.3526 and 1.3600. The Pound dates back to 886 AD and accounts for about 12% of FX trading, or roughly $630 billion a day (2022). GBP/USD makes up 11%, GBP/JPY 3%, and EUR/GBP 2%. A year ago, the Bank of England’s close 5–4 vote in February 2025 kept rates at 3.75% but signaled growing support for cuts. At the same time, the US FOMC took a more hawkish stance, worried that progress on inflation was slowing. This gap in policy direction helped shape the Pound’s path over the past year.

Outlook Into March Meetings

That gap widened as expected. The Bank of England delivered two cuts in the second half of 2025, taking the bank rate down to 3.25%. The Federal Reserve, in contrast, kept its funds rate steady and signaled “higher for longer.” This increased the rate advantage of the US dollar over the pound and has been a major driver of Cable’s performance. As of February 20, 2026, the case for more BoE easing is less clear. GDP data for Q4 2025 showed a flat economy. But the latest CPI reading for January 2026 showed inflation ticking back up to 2.8%. This firmer inflation puts the BoE in a tougher spot and adds uncertainty for traders. In the US, the story is still a strong economy. The early-February jobs report showed payrolls rising by 195,000. Core PCE, the Fed’s preferred inflation measure, came in at 2.7% last month. That is slow but steady progress toward the Fed’s target, which supports a patient stance and helps keep the dollar relatively strong. With weak UK growth and the US still offering higher yields, traders may want to treat GBP/USD rebounds as chances to sell. We see the bias as lower for Cable going into the March central bank meetings. Strategies that benefit from downside moves or range trading may be more suitable. For the next few weeks, we prefer buying GBP/USD put options with strikes below 1.2400 to keep risk defined. Implied volatility has been moderate, which makes options pricing more attractive ahead of key data. This approach aims to capture a drop toward the 2024 lows without the open-ended risk of shorting spot. Create your live VT Markets account and start trading now.

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