GBP/EUR Hits Highest Level In a Month
- Written by: Gary Howes
Image © Pound Sterling Live
The move to 1.1540 takes all-in money transfer rate above 1.15.
Pound sterling's run higher against the euro extended through the Friday session as investors absorbed fresh headlines on the Middle East conflict.
The pound-euro conversion rose to 1.1540, ensuring those with retail payments will be able to command 1.15 all-in exchange rates with competitive 0%-fee providers.
GBP/EUR, which is the UK's most important retail exchange rate, looks set to register its first weekly gain in five and the biggest single weekly advance since April 2025.
Those with payment needs, please reach out Pound Sterling Live's verified payments partner Horizon Currency to talk about securing a rate; my colleague Louisa, who heads up Horizon's dealing desk, will gladly assist (
Driving the move is the rapid reappraisal of future UK interest rate direction in light of the Middle East conflict: this time one week ago, there were two cuts expected from the Bank of England, but now there is just one.
The 'hawkish' repricing in the UK has been slightly more noticeable than elsewhere, including in the Eurozone, and that helps sterling.
Rate cut bets have retreated dramatically as traders see higher global inflation in the coming weeks and months as higher energy costs wash through.
Above: There's been a marked lift in interest rate expectations over recent days.
The pound's resilience against the euro is a remarkable development and one that few currency analysts we follow saw coming.
It would seem that the surge in oil and gas prices are proving far more detrimental to Eurozone dynamics, which explains why the euro and Swedish krona are the two biggest losers of the conflict.
Hopes for a de-escalation were dealt a blow Friday afternoon after U.S. President Donald Trump said he will only stop his campaign on the total surrender of the Iranian leadership.
There's little to suggest the Iranian's are inclined to cede to this all-out demand.
If so, expect the military strikes to continue next week, meaning the conditions that are favouring sterling against the euro can extend.
🔻However, the big risk is that the war escalates to the extent that oil and gas prices surge and destabilise the financial system.
If stock markets capitulate, then the GBP/EUR is at risk of coming under significant pressure. Indeed: the key takeaway, dear reader, is that the supportive element of the repricing in UK interest rate expectations is only valid IF global markets don't panic.
It's all change when they do panic.
"A prolonged closure of the Strait of Hormuz, or a sustained campaign against energy infrastructure, could yet drive crude and natural gas prices well beyond thresholds that have historically acted as a brake on global growth. The foreign exchange implications are asymmetric: the yen, the euro and sterling stand out as the major currencies most exposed to another wave of selling," says Karl Schamotta, Chief Market Strategist at Corpay.
