GBP/EUR Gains As Risk Appetite Improves

The Pound to Euro (GBP/EUR) exchange rate edged higher at the start of the week as improving global risk appetite bolstered demand for Sterling.

DAILY RECAP:

The Pound (GBP) started the week on the front foot as risk-on sentiment lifted the increasingly risk-sensitive currency.

Reports that the US and China have agreed on a framework for a trade deal boosted market optimism and underpinned Sterling, as investors grew more confident in the global growth outlook.

The news came just ahead of the planned meeting between Presidents Donald Trump and Xi Jinping in South Korea, where both sides are expected to solidify the framework and extend the current trade truce beyond November.

Additional support for the Pound came from the CBI distributive trades index, which rose to a five-month high in October, signalling resilience in UK retail activity despite broader economic uncertainty.

The Euro (EUR) was subdued in comparison, despite Germany’s IFO business climate index rising more than expected from 87.7 to 88.4.

Improved optimism in the manufacturing sector, driven by recovering new orders, lifted sentiment — but the weaker assessment of current business conditions tempered EUR gains.

As a result, the single currency traded broadly flat against a firmer Sterling through Monday’s European session.

Near-Term GBP/EUR Forecast: German Consumer Confidence in Focus

Looking ahead, Tuesday’s German GfK consumer confidence index will be the key data release for the Euro.

A modest improvement in sentiment is forecast, which could lend the common currency slight support if confirmed.

However, with markets cautious ahead of Thursday’s ECB policy decision and Eurozone GDP release, any gains may prove short-lived.

Meanwhile, with no major UK data scheduled, Sterling’s direction will likely hinge on global market sentiment — with risk appetite remaining a key driver in the near term.