The pound euro (GBP/EUR) exchange rate is rising for a fifth day.
The pound is rising as markets assess the impact of Middle East tensions on UK inflation.
The Office for Budget Responsibility warned inflation could reach 3% this year if energy prices remain elevated, potentially limiting the Bank of England’s scope to cut rates. Markets have now largely priced out a near-term rate cut and are considering the risk of a hike if energy costs stay high.
Meanwhile, the euro is weakening as investors weigh the impact of higher energy prices in the region, which is heavily reliant on imported energy and the latest German inflation data. German inflation data eased to 2% YoY from 2.1%.