The pound euro (GBP/EUR) exchange rate is rising for a second day towards €1.16.
The pound strengthened after the Bank of England held rates at 3.75%, with a more hawkish-than-expected 9–0 vote split.
The BoE also raised its inflation outlook, warning that rising energy prices linked to the Middle East conflict could push inflation above 3% in the coming quarters.
Markets have shifted to pricing in up to two rate hikes this year, a sharp turnaround from prior expectations of rate cuts.
The ECB also held rates steady but struck a more cautious tone, leaving the euro weaker against the pound despite modest upward revisions to its inflation forecasts and after it lowered its growth forecasts.
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