The pound-euro (GBP/EUR) exchange rate is rising after three consecutive days of losses.
The pound is edging higher as concerns over Prime Minister Keir Starmer’s leadership ease and optimism grows over closer UK-EU ties.
Starmer’s pledge to remain in office has helped stabilise sentiment, while comments from Rachel Reeves supporting deeper EU integration have also underpinned sterling.
However, gains may be capped by expectations of further Bank of England rate cuts as inflation is seen returning to 2% by spring.
Meanwhile, the euro is slipping amid limited data and the ECB signals that inflation will return to 2% despite undershooting the target currently.
The market is not expecting further ECB rate cuts this year.
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