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Pound to Euro Hits One-Year High as Euro Lacks Momentum
GBP/EUR hits a one-year high at €1.1716 as the euro weakens on ECB rate-cut expectations. Thursday's ECB minutes are the next catalyst for the pair.
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The Pound to Euro exchange rate pushed to a fresh one-year high Wednesday, touching €1.1716 as Sterling held its ground on a quiet UK data day and the single currency failed to find a bid.
Sterling's strength comes without a domestic catalyst. The UK calendar was empty, leaving the pound to trade on broader dollar moves and relative rate expectations. The euro, by contrast, has been under pressure from a widening growth gap between the US and the eurozone, with markets pricing a more aggressive easing path from the European Central Bank than from the Bank of England.
Traders are now looking to Thursday's ECB minutes for clues on how the Governing Council views the inflation outlook. A dovish read – one that confirms the market's expectation of a June rate cut – would likely push EUR/USD lower and extend the pound's gains against the euro. A hawkish surprise, however, could snap the recent trend and force a retracement in GBP/EUR.