Pound rises to 5-month high against Euro as it remains strong against Dollar

The Pound Sterling is now €1.16 against the Euro

The Pound has risen to a five-month high against the Euro as it also remains strong against the Dollar – but experts have warned it “isn’t a sign of a British economic miracle”.

It has been a great start to February for the Pound Sterling which is now €1.16 against the Euro – the highest since September 2025.

It is also doing well against the US Dollar, hitting $1.38 last week, which is the highest it’s been since October 2021.

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It has since retreated slightly this week to $1.37.

Experts said the Euro is being affected by stagnant growth in Germany and France while investors are backing Britain over Europe because the European Central Bank (ECB) is cutting rates more aggressively than the Bank of England (BoE).

They said the BoE’s base rate decision on Thursday is a “pivot point” to see if the Pound could climb higher.

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, explained why the Pound is doing well against the Euro.

He added: “The Pound is currently in a ‘sweet spot’, hitting a five-month high against the Euro on the back of ‘risk-on’ sentiment in the global markets and diverging central bank outlooks.

“As global stocks rally, investors favour the Pound over the Euro, which is currently weighed down by stagnant growth in Germany and France.

“Furthermore, the ECB’s lean toward aggressive rate cuts makes the Euro less attractive compared to Sterling’s higher yields. However, this rally is fragile. Sustainability depends on Thursday’s BoE decision.

“If the BoE maintains a ‘hawkish’ stance, as most market analysts expect and holds rates at 3.75%, emphasising inflation risks, the Pound could climb further.

“Conversely, if the Bank signals imminent cuts or expresses concern over UK growth, the ‘carry trade’ advantage will fade, likely pulling the Pound back. Thursday’s meeting is a pivot point that could either cement these gains or trigger a sharp correction.”

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