The pound-euro (GBP/EUR) exchange rate is rising steeply after losses last week.
The pound is gaining against the euro but weakening versus the US dollar, hitting a 2.5-month low as markets assess the impact of escalating tensions in Iran and surging oil prices.
Higher energy costs could lift inflation and limit the Bank of England’s scope to cut rates, with March cut expectations trimmed. UK manufacturing remained in expansion in February, offering some support.
The euro is under pressure as Europe faces heightened exposure to rising oil and gas prices, particularly given low inventories. LNG flows through the Strait of Hormuz are on hold, and some Qatar production has halted, lifting European natural gas prices sharply.
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