Forex News
TD Securities strategists argue that US Dollar upside should persist while global risk premia stay elevated, even though their longer-term 2026 view remains bearish. They highlight a safe-haven bid versus relative rate headwinds, see scope for a near-term USD positioning adjustment, and flag rich Dollar valuation versus fundamentals in their HFFV model.
Safe-haven support versus rich valuation
"Baseline: USD upside should persist as long as risk premia remains elevated. We are not yet revising our bearish USD view for 2026, particularly if an off-ramp to the war emerges in the coming weeks. In that scenario, fading US growth exceptionalism, a reduced safe-haven premium, and a potential intensification of the “Hedge America” trade following recent US actions would all weigh on the dollar."
"FX volatility is likely to rise once growth concerns dominate. Tactical central bank hawkishness may offer temporary currency support, but a broader risk-off episode—via equities, positioning and rates—would keep the USD bid and push pressure into high-beta G10 and EMFX as the chain reaction completes."
"Risk-off dynamics—via positioning unwinds, equity drawdowns, and terms-of-trade shocks—point to broader USD strength."
"We see risk premium in broad dollar pricing. It is rich against most currencies according to our HFFV model especially as the USD has not weakened in line with relative rates pricing recently."
"Our aggregate portfolio has switched to a negative trading weight in the USD from a positioning clean out and technical valuations not looking as cheap anymore."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
The United Kingdom (UK) headline Consumer Price Index (CPI) rose 3.0% over the year in February, at the same pace as seen in January, the data released by the Office for National Statistics (ONS) showed on Wednesday.
Markets predicted a 3.0% growth in the reported period. The UK inflation reading remained well above the Bank of England’s (BoE) 2.0% inflation target.
The core CPI (excluding volatile food and energy items) climbed 3.2% year-over-year (YoY) in the same period, compared to January’s 3.1% print and came in above the forecast of 3.1%.
Meanwhile, the monthly UK CPI arrived at 0.4% in February versus a decline of 0.5% reported in January, matching the market consensus.
GBP/USD reaction to the UK CPI inflation data
The Pound Sterling (GBP) attracts some buyers following the UK CPI inflation data. At the time of writing, the GBP/USD pair is trading 0.14% lower on the day to trade at 1.3390.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.54% | -0.61% | -0.25% | 0.37% | 0.35% | 0.06% | 0.12% | |
| EUR | 0.54% | -0.06% | 0.33% | 0.93% | 0.92% | 0.62% | 0.67% | |
| GBP | 0.61% | 0.06% | 0.32% | 0.99% | 0.99% | 0.68% | 0.67% | |
| JPY | 0.25% | -0.33% | -0.32% | 0.58% | 0.58% | 0.27% | 0.26% | |
| CAD | -0.37% | -0.93% | -0.99% | -0.58% | -0.00% | -0.31% | -0.26% | |
| AUD | -0.35% | -0.92% | -0.99% | -0.58% | 0.00% | -0.29% | -0.30% | |
| NZD | -0.06% | -0.62% | -0.68% | -0.27% | 0.31% | 0.29% | -0.01% | |
| CHF | -0.12% | -0.67% | -0.67% | -0.26% | 0.26% | 0.30% | 0.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
This section below was published at 03:15 GMT as a preview of the UK Consumer Price Index (CPI) inflation data.
- The UK’s ONR Office publishes the February CPI data on Wednesday.
- The UK headline inflation is expected to remain well above target.
- Core inflation is also seen running hot, likely at 3.1% YoY.
The UK Office for National Statistics (ONS) will release the February Consumer Price Index (CPI) figures on Wednesday at 07:00 GMT, a print that will matter for markets. Consensus expectations point to inflation pressures keeping their grasp on the economy.
UK consumer inflation remains one of the most important inputs for the Bank of England (BoE) and typically carries real weight for the British Pound (GBP). Following the latest hawkish hold by the BoE on March 19, investors now anticipated the ‘Old Lady’ to hike its policy rate at its April 30 gathering.
What to expect from the next UK inflation report?
Headline UK CPI is expected to rise 3% in the year to February, matching the January reading. On a monthly basis, inflation is seen gaining 0.4%, reversing the 0.5% contraction recorded the previous month.
Core inflation, which strips out the more volatile food and energy components and is therefore more closely watched by the BoE, is forecast to have gained 3.1% on an annual basis. From a month earlier, core CPI is expected to have accelerated to 0.5%, after declining by 0.6% at the beginning of the year.
How will the UK CPI data affect GBP/USD?
The BoE’s rate-setting MPC voted unanimously to keep the bank rate at 3.75% last week, its second consecutive hold since it slashed rates by 25 basis points in December.
At its latest meeting, the BoE maintained its interest rates at 3.75%, but the event revealed a more hawkish stance than anticipated. The 9-0 decision, a sign of agreement, highlighted worries about inflation stemming from climbing energy costs. The Consumer Price Index is expected to hover around 3% in the second quarter and 3.5% in the third.
Governor Andrew Bailey noted that there has been an immediate rise in petrol prices and warned that household energy costs will increase if these trends continue. The Monetary Policy Committee (MPC) emphasised awareness of second-round effects, cautioning that prolonged energy shocks might necessitate stricter monetary policy, while acknowledging that weak growth could alleviate medium-term inflationary pressures.
Implied rates currently suggest a little more than 67 basis points of tightening will occur this year, while consensus sees the central bank increasing its policy rate by a quarter point at its next gathering.
Back to technicals, Senior Analyst at FXStreet, Pablo Piovano, notes that GBP/USD appears to have encountered some contention at its current yearly lows near 1.3200 (March 13). “Further weakness from here could expose a move toward the November 2025 base at 1.3010 (November 5),” Piovano adds.
“In case bulls regain the upper hand, there is interim resistance at the 55-day SMA at 1.3495, ahead of the weekly top at 1.3574 (February 26) and the YTD ceiling at 1.3868 (January 27),” he concludes.
Piovano also points out that momentum indicators remain bearish for now, as the Relative Strength Index (RSI) eases below the 47 level and the Average Directional Index (ADX) near 30 suggests quite a strong trend.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Danske Research Team highlights that EUR/USD traded around 1.16 with Germany Ifo survey is due. Euro area PMIs softened in services while manufacturing was supported by longer delivery times and higher input prices, reinforcing the ECB’s hawkish bias and keeping upward pressure on short-term EUR rates despite weaker growth signals.
ECB hawkish bias supports Euro rates
"In the euro area, the flash composite PMI fell more than expected in March to 50.5 (prior: 51.9), driven by a sharp drop in services to 50.1 (prior: 51.9). Manufacturing rose to 51.4 (prior: 50.8) but this was largely driven by longer delivery times amid supply distortions from the war in Iran. Manufacturing input prices surged to their highest level since September 2022, signalling a surge in cost, while output prices showed a muted increase."
"The print highlights the ECB's dilemma of balancing weaker growth and rising inflation, with communication so far focusing on inflation risks, reflecting a hawkish bias."
"In Germany, the March Ifo survey is due and should offer further insight into preliminary growth and price effects from the war in Iran. Yesterday's PMI readings showed weaker-than-expected services, while manufacturing outperformed. In manufacturing, both new orders and output rose, a positive signal for the sector, but the decline in services and a sharp rise in manufacturing input prices remain concerning."
"EUR/USD traded around the 1.16 level. Upwards pressure on short-term interest rates, in particular on the EUR market, persisted amid more hawkish comments from ECB officials."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- GBP/USD meets with a fresh supply after failing to make it through the 200-day SMA.
- Geopolitical uncertainties and inflation fears underpin the USD, weighing on the pair.
- The UK CPI comes in line with market expectations and does little to influence the GBP.
The GBP/USD pair once again faces rejection near a technically significant 200-day Simple Moving Average (SMA) and turns lower for the second consecutive day on Wednesday. Spot prices stick to modest intraday losses below the 1.3400 mark through the early European session and react little to the latest UK consumer inflation figures.
The UK Office for National Statistics (ONS) reported that the headline Consumer Price Index (CPI) rose 3.0% over the year in February, matching the previous month's reading and consensus estimates. However,, the core CPI, which excludes volatile food and energy items, came in above the forecast and climbed 3.2% YoY from 3.1% in January. The data validates the Bank of England's (BoE) hawkish outlook, though fails to provide any impetus to the British Pound (GBP) or the GBP/USD pair amid the emergence of some US Dollar (USD) buying.
Despite reports that diplomatic efforts are underway to establish a one-month ceasefire mechanism between the US and Iran, the conflict, so far, has shown no signs of easing. In fact, Israel continues with its strikes on the Islamic Republic, while the Trump administration has directed thousands of soldiers from the US Army's elite 82nd Airborne Division to the Middle East. This keeps geopolitical risks in play, which, in turn, supports the safe-haven buck amid emerging bets for rate hikes by the Federal Reserve (Fed) and weighs on the GBP/USD pair.
Meanwhile, the UK central bank last week signaled the potential rate hike as early as April amid inflation fears stemming from the Iran war. This might hold back traders from placing aggressive bearish bets around the GBP, warranting some caution before positioning for any further depreciating move for the GBP/USD pair. That said, a sustained move and acceptance above the 200-day SMA, around the 1.3430-1.3435 region, is needed to confirm a bullish outlook.
(The story was corrected on March 25 at 08:50 GMT to say that the Core UK CPI came in above the forecast of 3.1%, not in line with expectations.)
Economic Indicator
Core Consumer Price Index (YoY)
The United Kingdom (UK) Core Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. The YoY reading compares prices in the reference month to a year earlier. Core CPI excludes the volatile components of food, energy, alcohol and tobacco. The Core CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Last release: Wed Mar 25, 2026 07:00
Frequency: Monthly
Actual: 3.2%
Consensus: 3.1%
Previous: 3.1%
Source: Office for National Statistics
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
Commerzbank’s Thu Lan Nguyen highlights that the Swiss Franc (CHF) has weakened since the Iran war began, helped by ultra-low Swiss inflation and the Swiss National Bank’s (SNB) persistent intervention threats. With EUR/CHF back at higher levels, she questions whether verbal warnings alone can prevent another test of 0.90 if the conflict escalates, citing past market behaviour.
Franc soft despite safe-haven profile
"The Swiss franc is among the currencies that have lost ground since the outbreak of the war in Iran. On the one hand, this is certainly due to the fact that Switzerland, with an inflation rate of just 0.1% (year-over-year), is in a comparatively strong position to handle a surge in inflation without having to tighten monetary policy extremely."
"On the other hand, the Swiss National Bank (SNB) continues to maintain a threatening stance regarding intervention. Just yesterday, Board member Petra Tschudin warned once again that the SNB stands ready to intervene against a strong franc."
"Of course, with the EUR-CHF exchange rate currently back at significantly higher levels, this does not pose an immediate threat. "
"However, it remains to be seen whether the verbal threat will be enough to prevent another test of the 0.90 mark should the Iran conflict escalate again."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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