Pound to Dollar Exchange Rate Slides as Technical Support Fails

Modified: Friday, 20 February 2026 09:30 BST - Written by David Woodsmith

STORY LINK Pound to Dollar Exchange Rate Slides as Technical Support Fails

The Pound to Dollar exchange rate (GBP/USD) has broken below the critical 1.3500 support level after stronger US data and Federal Reserve minutes boosted the dollar across global markets.

Sterling’s retreat to four-week lows near 1.3450 reflects narrowing UK-US yield spreads and earlier weak labour-market data, although a much stronger-than-expected 1.8% surge in UK retail sales (vs 0.2% forecast) has helped stabilise sentiment and limit deeper losses.

While the technical break leaves GBP/USD vulnerable in the near term, resilient UK consumer spending complicates expectations of aggressive Bank of England easing, potentially slowing the pace of further downside if US dollar momentum fades.

GBP/USD Forecasts: Slides Below Key 1.3500 Support

The Pound to Dollar (GBP/USD) exchange rate rallied to 1.3580 on Wednesday, but failed to hold the gains and retreated to re-test the important 1.35 support area on Thursday.

A break below this level triggered further losses to 4-week lows close to 1.3450.

According to Scotiabank; “For GBPUSD, technicals are bearish following the break of the 50 day MA (1.3529), with risk of a push below the 200 day MA (1.3445) and a test of the January lows in the mid-1.33s.”

Lloyds Bank also pointed to the importance of the 1.35 support area.

The dollar secured net gains across the spectrum after Federal Reserve minutes and a decline in jobless claims while there was no further Pound support from equities as the FTSE 100 index lost ground amid losses in the mining sector.

Scotiabank commented on the Pound; “Fundamental support has been eroded on the back of weaker jobs data, narrowing yield spreads as markets have repriced easing from the BoE.”

There are further important data releases on Friday. Scotiabank added; “Near-term domestic risk remains elevated into Friday’s retail sales and preliminary PMI’s, with market participants eyeing healthy levels of growth in services and modest expansion in manufacturing. GBP appears somewhat vulnerable to disappointment, given that expectations are relatively elevated.”

The US interest rate outlook remains a key element for currency markets with some dollar support if there are further doubts over Fed easing.

At this stage, traders are pricing in around a 70% chance of a cut by June. ING noted that the Fed minutes from January confirmed that some members wanted a more balanced stance to reflect inflation risks.

Nevertheless, it commented; “the broad takeaway from the minutes seemed to be: a) downside risks to employment had lessened, b) activity was seen as relatively strong and c) that an expected softening in inflation could pave the way for further rate cuts later in the year.”

It added; “Our takeaway is that the emphasis will now shift from the labour market back to the inflation readings. These need to fall to validate the two rate cuts still priced into money markets this year. We think that will be the case and that the Fed will indeed cut twice.”

MUFG also noted the labour-market commentary and added; “The minutes released last night certainly have helped reinforce expectations that the FOMC could be on hold for a longer period with views on the labour market clearly improving.”

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TAGS: Pound Dollar Forecasts