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Pound Sterling weakens against Dollar and Euro after grim jobs data: "Its downward trajectory is set to continue"

ended 17. February 2026

THE Pound has weakened against the Dollar and the Euro after grim jobs data was released – and experts warn it could go lower.

The UK unemployment rate for people aged 16 years and over was 5.2% in October to December 2025. This is up in the latest quarter and above estimates of a year ago, according to official data published this morning.

Annual wage growth in real terms, adjusted for inflation, was just 0.5% for both regular pay and total pay in October to December 2025.

The Pound has fallen around 0.5% to $1.36 and €1.15 – but experts expect that to slide further towards $1.33 and €1.13 in the coming weeks and months.

They say this is because the Bank of England (BoE) is now expected to “aggressively” cut  its base rate to stimulate the economy.

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said: "The Pound has weakened against nearly all major peers this morning following UK unemployment rising to 5.2%. This data suggests a cooling economy, shifting the BoE focus from fighting inflation to preventing recession. 

"Consequently, markets now price in a 90% chance of a March rate cut, diminishing the high-yield appeal that usually attracts investors to Sterling. The outlook remains bearish. Pound/Dollar exchange rate is projected to drift towards $1.33 as the US Federal Reserve maintains higher rates, creating a divergence that favours the Dollar. 

"Against the Euro, the Pound could slide toward €1.13, a level not seen since November should the BoE cut more aggressively than the European Central Bank (ECB). Unless tomorrow’s inflation data is unexpectedly high, the Pound’s downward trajectory is set to continue as ‘confidence quietly drains’ from the UK economy."

Prem Raja, Head of Trading Floor at Currencies 4 You, agreed that the outlook for the Pound was negative.

He continued: "The UK employment data this morning was bad news for anyone holding Sterling due to weaker wage growth in the UK – and unemployment being at it's highest since 2021. 

"The Pound has already fallen around 0.5% after this release due to traders now betting on a cut from the BoE in March – it seems likely that Sterling potentially weakens further from here with a rate cut on the horizon."

 


 

2 responses from the Newspage community

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Editor
Tony Redondo
Founder at Cosmos Currency Exchange
The Pound has weakened against nearly all major peers this morning following UK unemployment rising to 5.2%. This data suggests a cooling economy, shifting the Bank of England’s focus from fighting inflation to preventing recession. Consequently, markets now price in a 90% chance of a March rate cut, diminishing the high-yield appeal that usually attracts investors to Sterling. The outlook remains bearish. GBP/USD is projected to drift toward $1.33 as the US Federal Reserve maintains higher rates, creating a divergence that favours the Dollar. Against the Euro, the Pound could slide toward €1.13, a level not seen since November should the BoE cut more aggressively than the ECB. Unless tomorrow’s inflation data is unexpectedly high, the Pound’s downward trajectory is set to continue as "confidence quietly drains" from the UK economy.
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Prem Raja
Head of Trading Floor at Currencies 4 You
The UK employment data this morning was bad news for anyone holding Sterling due to weaker wage growth in the UK- and unemployment being at it's highest since 2021. The Pound has already fallen around 0.5% after this release due to traders now betting on a cut from the BoE in March- it seems likely that Sterling potentially weakens further from here with a rate cut on the horizon.