- Pound (GBP) rises, adding to last week’s gains
- There are few UK catalysts this week
- Euro (EUR) falls with attention on Russia – Ukraine peace talks
- Eurozone PMI data is due on Friday
The Pound-Euro (GBP/EUR) exchange rate is rising adding to last week’s gains. The pair rose 0.36% in the previous week, settling on Friday at €1.1467. It traded between €1.1410 and €1.1489. At 17:30 UTC on Monday, GBP/EUR trades 0.07% higher at €1.1475.
The pound is edging up on Monday after booking gains last week; trading volumes remain low given the thinned holiday trade. Volumes are expected to remain thin in the run-up to the New Year holiday.
There are also few fresh catalysts or scheduled events that could move the currency between now and the new year.
The Bank of England cut interest rates earlier this month in a narrow vote by policymakers, signaling that the gradual pace of rate cuts could slow further.
The rate currently sits at 3.75% as inflation in the UK cooled by more than expected to 3.2% YoY in November. The BoE expects the inflation rate to return to 2% by Spring next year.
The EUR is under pressure amid a quiet economic calendar and as attention remains firmly on Russian-Ukrainian peace progress.
There is little in the way of fresh catalysts to drive the EUR between now and the New Year holiday.
Instead, the market is monitoring developments between Russia and Ukraine. A call between Russian President Putin and U.S. President Trump, which followed fresh U.S. talks with Ukraine, raised questions about the prospect of a peace deal as Russia pointed to additional complications.
Putin told Trump that it would be revising its position on claims that Ukrainian drones attacked one of his residences. Ukraine is cooling; these are allegations of fabrication aimed at derailing the peace process.
Looking ahead, PMI figures for December will be released on Friday. These are the second readings, so don’t tend to be as market-moving as the preliminary release.