The pound-euro (GBP/EUR) exchange rate is falling, giving back yesterday’s gains.
The pound is weakening against both the euro and the US dollar after President Trump’s comments reduced hopes of de-escalation in the Middle East, pushing oil prices higher. Sterling remains vulnerable due to the UK’s reliance on imported energy, weak growth, and fragile public finances.
While markets expect Bank of England rate hikes, the BoE Governor has pushed back against aggressive rate-hike expectations.
The euro is rising against the pound but falling versus the dollar, with higher energy prices also weighing on the eurozone outlook despite still-elevated expectations for ECB tightening.