The British Pound has traded in a relatively narrow range against the Euro and US Dollar in early February, with the GBP/EUR exchange rate holding above the 1.15 level while the GBP/USD exchange rate has hovered around 1.36 following January gains driven largely by broad US dollar weakness.
Pound to Euro (GBP/EUR): 1.15459 (-0.14%)
Pound to Dollar (GBP/USD): 1.36241 (-0.16%)
Euro to Dollar (EUR/USD): 1.17999 (-0.02%)
Rabobank notes that sterling has been steadily improving since the UK’s November budget, initially supported by a reduction in bearish market positioning and more recently by stronger-than-expected UK economic data.
The bank highlights that EUR/GBP breaking below the 0.8650 area, a key long-term moving average level, suggests sterling’s underlying tone has strengthened, prompting Rabobank to lower its one-month EUR/GBP forecast to 0.86.
Improved UK PMI readings, firmer manufacturing output and stronger retail sales have reinforced expectations that economic activity recovered following last year’s fiscal uncertainty.
Rabobank warns that risks remain for the pound, particularly from expectations of further Bank of England rate cuts and potential political uncertainty linked to Prime Minister Starmer’s leadership position.
The bank adds that GBP/USD performance continues to be heavily influenced by wider US dollar trends, with sterling’s performance against European currencies offering a clearer gauge of underlying pound momentum.
