Bias: bullish-to-range-bound, as GBP/EUR sits above the 90-day average and in the upper half of the three-month range.
Key drivers:
Rate gap: The BoE is set to ease gradually, while the ECB looks to hold steady, which limits the scope for a clear GBP upside against the Euro.
Risk/commodities: Oil remains firm with swings in price, feeding inflation risk for both the UK and the euro area and keeping FX moves more volatile.
Macro factor: The ECB is expected to maintain a neutral stance through the coming year, so EUR gains should be capped unless data diverges.
Range: GBP/EUR is likely to drift within the current three-month band, with a cautious tilt toward the upper end but no decisive breakout.
What could change it:
Upside risk: UK data surprises to the upside, lifting growth signals and nudging the BoE path toward less easing.
Downside risk: euro-area data beats forecasts and the ECB signals a firmer stance, pushing EUR higher.
