February 09, 2026
Bank of England Policy Preview: What February CPI & Jobs Data Mean for Sterling
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Who Should Read This?
- UK importers and exporters exposed to GBP volatility
- Finance directors and CFOs managing multi-currency cash flow
- SMEs planning overseas payments, repatriation of profits or hedging strategies
- Business owners seeking clarity on how BoE decisions affect exchange rates
Why It’s Worth Reading
- February CPI and jobs data could reshape interest-rate expectations
- Sterling is highly sensitive to inflation and wage signals
- FX volatility can materially impact margins, budgets and forecasts
- Indigo FX helps UK businesses anticipate market moves and plan with confidence
What You’ll Learn
- Why CPI and labour data matter so much to the BoE
- How markets interpret inflation, unemployment and wage trends
- What February’s data could mean for GBP vs EUR and USD
- How UK businesses can manage FX risk ahead of policy shifts
Why February Data Matters for the Bank of England
As the Bank of England (BoE) weighs its next policy steps, February’s inflation and labour-market data will play a decisive role in shaping expectations for interest rates and the direction of Sterling. For UK businesses with overseas exposure, understanding how these releases influence FX markets is essential for managing risk and protecting cash flow in 2026.
The Bank of England’s mandate is clear: maintain price stability while supporting sustainable economic growth. Inflation and employment data sit at the heart of that balance.
February’s Consumer Price Index (CPI) release on March 25 will provide one of the clearest signals on whether inflation is continuing its path back towards the BoE’s 2% target, or proving more persistent than expected. At the same time, labour-market figures such as unemployment, wage growth and claimant counts will offer insight into domestic demand pressures.
Together, these data points shape expectations around:
- When interest rates may be cut
- How quickly policy might ease
- How long rates may remain restrictive
FX markets react quickly to any deviation from expectations, particularly when rate-cut timing is in question.
Inflation in Focus: What February CPI Could Signal
UK inflation has eased significantly from its post-pandemic peak, but policymakers remain cautious. Services inflation and wage-linked price pressures remain key concerns for the Monetary Policy Committee (MPC).
If February CPI comes in higher than expected:
- Markets may push back expectations for rate cuts
- Sterling could strengthen as yields remain supported
- GBP volatility may increase, particularly against EUR
If CPI undershoots expectations:
- Rate-cut bets could be brought forward
- Sterling may soften against USD and other higher-yielding currencies
- Businesses with overseas costs may see short-term relief
Core inflation (which strips out volatile food and energy prices) will be especially important. Persistent core inflation often signals that price pressures are embedded, limiting the BoE’s flexibility.
Labour-Market Data: The Missing Piece of the Puzzle
While inflation grabs headlines, the labour market often provides the deciding vote for policymakers.
Key metrics markets will be watching include:
- ILO unemployment rate
- Average earnings (including bonuses)
- Claimant count changes
Strong wage growth suggests ongoing inflationary pressure, even if headline CPI is falling. A cooling jobs market, by contrast, supports the case for easing policy later in the year.
From an FX perspective:
- Tight labour data tends to support GBP
- Signs of slack can weaken Sterling and increase volatility
This makes February’s jobs report a potential catalyst for sharp short-term currency moves.
What This Means for Sterling in Early 2026
Sterling’s outlook hinges on the balance between slowing inflation and labour-market resilience.
- GBP vs EUR: Diverging growth paths and policy timing between the BoE and ECB could drive volatility in EUR/GBP. Any sign the BoE delays cuts longer than the ECB may support Sterling.
- GBP vs USD: US economic resilience and Federal Reserve policy expectations remain dominant. Softer UK data could leave GBP vulnerable if US yields stay elevated.
Even modest data surprises can trigger outsized FX reactions in uncertain policy environments, especially when markets are finely balanced on rate-cut timing.
Why FX Planning Matters More Than Ever for UK Businesses
For UK companies trading internationally, currency movements driven by economic data directly affect:
- Import and export pricing
- Overseas payroll and supplier costs
- Revenue forecasts and profit margins
Relying on spot rates alone exposes businesses to unnecessary risk during periods of heightened data-driven volatility.
At Indigo FX, we help clients navigate these environments using:
- Forward contracts to lock in future exchange rates
- Market and limit orders to target favourable levels
- Structured FX strategies aligned to cash-flow needs
- Expert market insight ahead of key data releases
Stay Ahead of BoE-Driven Volatility with Indigo FX
February’s CPI and jobs data could prove pivotal for Sterling and for the Bank of England’s next move. Whether inflation surprises, wages remain sticky, or the labour market softens, FX markets are unlikely to stay quiet.
Indigo FX works with UK businesses to anticipate policy shifts, manage exposure and plan currency strategies with confidence.
If your business is exposed to FX risk, now is the time to plan. Speak to Indigo FX today to understand how upcoming economic data could impact your currency position.