- Pound (GBP) is rising after three days of losses
- Falling oil prices and an improved market mood lift GBP
- Euro (EUR) is falling but rises against the USD
- The market has lowered ECB rate hike expectations
The Pound-Euro (GBP/EUR) exchange rate is rising after three days of losses. The pair fell 0.51% in the previous session, settling on Tuesday at €1.1443. The pair traded between €1.1437 and €1.1528. At 09:30 UTC on Wednesday, GBP/EUR trades +0.1% at €1.1454.
The pound is rising after three straight days of losses as broader market sentiment improves, despite a quiet UK economic calendar.
Stock markets globally are rebounding as investors move back into riskier assets and currencies on growing hopes of de-escalation in the Middle East.
President Trump has signalled that he wants to bring the conflict to an end, while Tehran has also suggested it could be prepared to stop fighting under the right conditions.
Oil prices are falling sharply in response, with WTI dropping below $100 a barrel to around $95, after posting a record rise over the month of March.
That move is supportive for sterling, given the UK’s reliance on imported energy and the sensitivity of the domestic inflation outlook to oil and gas prices.
The UK economic calendar is quiet today. Data released yesterday showed that the UK economy grew by just 0.1% quarter-on-quarter in the final quarter of last year, underlining how weak growth already was before the conflict began.
The euro is falling against the pound but rising against the US dollar as investors continue to assess the latest developments in the Middle East and growing hopes of a ceasefire.
Recent ECB rhetoric has turned somewhat more hawkish. Yesterday, Governing Council member Fabio Panetta discussed the need to prevent a wage-price spiral, while also warning that any policy response should remain proportionate.
Still, with oil and energy prices now easing, markets have pared back ECB tightening expectations to around 63 basis points.