The GBP to EUR exchange rate currently shows a bullish bias. The strength of the pound is underpinned by the Bank of England signaling a slower pace for future interest rate cuts and positive retail sales figures potentially emerging. Conversely, the euro faces bearish pressures from the European Central Bank's cautious stance on interest rates, alongside concerns about a stronger euro potentially dampening inflation.
Market dynamics include the interest rate differential between the UK's expected more aggressive rate cuts compared to the eurozone's policies. Additionally, the UK’s inflation trends and fiscal policy adjustments are significant macro factors affecting GBP strength. The pound has recently traded near 60-day highs, indicating a solid performance against the euro.
The near-term trading range for GBP to EUR may remain relatively stable, oscillating within previously established levels. An upside risk includes stronger-than-expected retail sales in the UK, while a downside risk may arise from renewed geopolitical tensions impacting European economic sentiment.
