EUR/GBP Outlook:
Slightly positive, but likely to move sideways, as the rate is near its recent average and shows mixed signals.
Key drivers:
• Rate gap: The European Central Bank holds interest rates steady, whereas the Bank of England's recent dovish policy suggests a more cautious approach.
• Risk/commodities: Oil prices have recently surged, which can support the euro, as higher oil costs are beneficial for some European sectors.
• One macro factor: The UK’s mixed economic indicators are causing uncertainty, particularly with expectations of a potential rate cut by the Bank of England.
Range:
EUR/GBP is likely to hold within its recent range, reflecting stability as it touches short-term highs.
What could change it:
• Upside risk: A surprise upside in UK GDP growth could strengthen the pound relative to the euro.
• Downside risk: Renewed geopolitical concerns regarding Ukraine may further weaken the euro against the pound.
