The GBP to EUR exchange rate currently shows a bullish bias, buoyed by hawkish signals from the Bank of England.
Key drivers include the interest rate differential, with the Bank of England hinting at slower future rate cuts as inflation eases, while the European Central Bank remains cautious about the euro’s strength impacting inflation. Economic growth in the UK is projected to slow, which could further influence the pound. The recent stable trading of GBP to EUR around 1.1466, slightly above its 3-month average, reflects this dynamic.
In the near term, the GBP/EUR exchange rate may trade within its recent 1.1322 to 1.1526 range. An upside risk could arise from improved UK retail sales data supporting the pound, whereas a downside risk might stem from geopolitical tensions in Europe or unsupportive economic statistics from Germany.
Overall, careful monitoring of economic indicators and policy directions will be essential in navigating the currency exchange landscape.