The UK has a busy data week. January jobs figures are due on Tuesday, and inflation data is due on Wednesday. The jobs report is expected to show a cooler labour market and slower annual wage growth.
If these trends continue in the March data, a Bank of England rate cut next month looks more likely. Inflation is also expected to ease. Headline CPI is forecast to edge lower because of airfare moves, softer food prices, and a weaker impact from last year’s private school tax rise.
Uk Data And Rate Cut Expectations
Core services inflation is expected to change little. Political attention has faded, but betting markets put the chance of Prime Minister Keir Starmer stepping down by the end of June at about 70%.
The pound is seen as at risk of falling at times if Starmer’s position weakens. EUR/GBP is linked to a target level of 0.88.
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The next UK data releases are likely to confirm a weaker economic picture. Last week’s jobs report on February 11, 2026, showed unemployment edging up to 4.5%. It also showed annual wage growth slowing to 3.8%, the lowest since mid-2024. Alongside this, last Wednesday’s inflation data showed headline CPI falling to 2.9%. Together, these figures support the view that the economy is slowing.
Sterling Outlook And Eur Gbp Target
A cooler labour market and easing price pressures make a Bank of England rate cut in the coming months look more likely. A similar pattern played out in the second half of 2025, when weaker data steadily increased expectations for easier policy. Markets are now pricing in a meaningful chance of a rate cut by the end of next quarter, which could keep pressure on the pound.
Politics is also weighing on sterling. In recent YouGov polls, Prime Minister Keir Starmer’s approval rating has fallen to net -25, as public sector disputes continue and growth stays weak. Any new signs of instability around his leadership could trigger more drops in the currency.
Given our dovish view on the Bank of England and these political risks, we remain bullish on EUR/GBP. The pair has recently broken above 0.87, a level that acted as strong resistance through 2025. This suggests strategies positioned for a move towards our 0.88 target may still be attractive.
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