GBP/EUR Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average and lacks a clear driving factor.
Key drivers:
• Rate gap: The Bank of England is anticipated to cut rates by mid-2026, while the European Central Bank is taking a cautious approach with no immediate rate changes expected.
• Risk/commodities: Oil is trading well above its recent average, which could support the euro; however, any economic pressures from rising energy costs may weigh on both currencies.
• One macro factor: The UK’s manufacturing sector showed growth in January, potentially providing short-term support to the GBP.
Range: The GBP/EUR rate is likely to hold steady within its recent range, showing limited movement in the coming weeks.
What could change it:
• Upside risk: A sudden improvement in UK economic indicators could energize the Pound.
• Downside risk: A delay or uncertainty in economic policy direction could weaken the Pound further.