Sterling is back under pressure as political risk re-enters the conversation, with key US and EU inflation data now in focus.
Key Highlight
- The US dollar gained momentum.
Market Recap
Dollar Strengthens as Jobs Data Reassures Markets
The US dollar moved higher in the latter part of the session after weekly Initial Jobless Claims came in slightly better than forecast. Claims rose by 4,000 to 212,000 for the week ending 21 February, reinforcing the view that the US labour market remains resilient and that large-scale layoffs are still limited.
At the same time, demand for the dollar was supported by a shift away from riskier assets. Heightened geopolitical tensions – particularly growing strain between Washington and Tehran over nuclear negotiations – dampened investor sentiment. With expectations fading that a diplomatic resolution will be reached within the previously suggested timeframe, markets leaned toward safe-haven currencies, benefiting the USD.
Sterling, meanwhile, came under pressure as investors trimmed risk exposure ahead of the Gorton and Denton by-election results, leaving GBP softer on the day.
Market Update: Political Developments and Key Data in Focus
Sterling Edges Lower After By-Election Result
The pound is slightly weaker following the Greens’ win in the Gorton and Denton by-election. As markets had largely anticipated this outcome, the reaction has been measured. However, the result reinforces an existing political risk premium in GBP and may contribute to the view that the UK’s political landscape is gradually shifting left.
What this means: Sterling upside could remain limited in the short term, particularly if investors continue to price in greater policy uncertainty.
Euro Watching German Inflation
Preliminary February CPI data from Germany is expected at 0.4% month-on-month and 2.0% year-on-year.
A stronger-than-expected reading would challenge the narrative that inflation pressures are easing and could lend support to the euro.
A softer print would strengthen the case for further monetary easing expectations, potentially weighing on EUR.
What this means: Inflation data will be key in shaping near-term expectations around European Central Bank policy direction.
US Producer Prices to Test Inflation Debate
US PPI for January is forecast at 0.3% month-on-month, down from 0.5% previously.
A higher reading would reinforce the view that inflation remains sticky, supporting a “higher for longer” rate outlook and underpinning the dollar.
A softer number would keep expectations of rate cuts later in the year intact, potentially limiting further USD strength.
What this means: Today’s data could influence interest rate expectations and drive short-term USD volatility.
Canadian Dollar Sensitive to Growth Data
Canada’s monthly GDP is expected to show modest growth of 0.1%, though Q4 annualised growth is projected to contract at -0.4% following a previous 2.6% expansion.
What this means: A negative surprise would likely add pressure to the Canadian dollar, while stronger figures could offer some support.
27th February 2026
How We Can Help...
Our team are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer guidance on the best options available to you.
Get in Touch!
P: 07441 910 897
E: FX-Admin@frank-exchange.com
This document has been prepared solely for information and is not intended as an Inducement concerning the purchase or sale of any financial instrument. By its nature market analysis represents the personal view of the author and no warranty can be, or is, offered as to the accuracy of any such analysis, or that predictions provided in any such analysis will prove to be correct. Should you rely on any analysis, information, or report provided as part of the Service it does so entirely at its own risk, and Frank eXchange Limited accepts no responsibility or liability for any loss or damage you may suffer as a result. Information and opinions have been obtained from sources believed to be reliable, but no representation is made as to their accuracy. No copy of this document can be taken without prior written permission.
Contact Us
Office
Unit F1, Ransom Hall, Ransom Wood Business Park, Southwell Road West,
Mansfield, NG21 0HJ.
Legals:
Payment and e-money services (Non MIFID related products) are provided by The Currency Cloud Limited. Registered with the Dutch Chamber of Commerce in the Netherlands under number 72186178. Registered office Mr. Treublaan 7, 1097 DP, Amsterdam, Netherlands. CurrencyCloud B.V. is licensed and regulated by De Nederlandsche Bank as an Electronic Money Institution (Relation Number: R142701)
For United States, Payment services for Frank Exchange Limited (Non MIFID related products) are provided by Visa Global Services Inc. (VGSI), a licensed money transmitter (NMLS ID 181032) in the states listed here.VGSI is licensed as a money transmitter by the New York Department of Financial Services. Mailing address: 900 Metro Center Blvd, Mailstop 1Z, Foster City, CA 94404. VGSI is also a registered Money Services Business (“MSB”) with FinCEN and a registered Foreign MSB with FINTRAC. For live customer support contact VGSI at (888) 733-0041.
Frank eXchange’s Payment and Foreign Currency Exchange Services are also provided by Ebury Partners UK Limited.
Ebury Partners UK Limited (EPUK) is an Authorised Electronic Money Institution (Financial Services Register No. 900797) and is licensed to provide payment services including FX spots and FX Forwards for the commercial purpose of the facilitation of payments for identifiable goods or services and direct investments. Ebury Partners UK Limited is registered with the Information Commissioner's Office, with registration number: ZA345828.
Anti-Bullying and Harassment Policy
At Frank eXchange Limited, we are committed to providing a safe and respectful environment for both our customers and staff. We do not tolerate any form of bullying, harassment, or abusive behaviour towards our employees.
Any communication that is deemed offensive, threatening, or disrespectful may result in the termination of services. We expect all interactions to be conducted with professionalism and courtesy to ensure a positive experience for everyone involved.
Thank you for your understanding and cooperation.