GBP/EUR Outlook: Slightly positive, but likely to move sideways, as the rate is just above its recent average and lacks a clear driver for a significant change.
Key drivers:
• Rate gap: The Bank of England's cautious approach to rate cuts contrasts with the European Central Bank's stable interest rate outlook, supporting the pound.
• Risk/commodities: With oil prices rising significantly, the increased energy costs could weigh on the euro due to their impact on inflation and economic growth in the Eurozone.
• One macro factor: The UK's projected GDP growth slowdown amid concerns over new US tariffs adds pressure on the pound.
Range: The GBP/EUR is expected to hold within its recent range, showing limited volatility.
What could change it:
• Upside risk: A positive jobs report from the UK could boost the pound's strength.
• Downside risk: Escalating trade tensions or poorer economic data from the UK could lead to a weaker pound.
