The Pound to Euro (GBP/EUR) exchange rate strengthened on Monday as easing fears over UK political instability helped Sterling recover from last week’s sharp selloff.
At the time of writing, GBP/EUR was trading around €1.1493, up roughly 0.3% on the day after rebounding from recent multi-week lows.
Pound to Euro (GBP/EUR): 1.15012 (+0.36%)
Pound to Dollar (GBP/USD): 1.33945 (+0.63%)
Euro to Dollar (EUR/USD): 1.16462 (+0.28%)
DAILY RECAP:
The Pound (GBP) moved higher at the start of the week as investors grew less anxious about the prospect of an imminent Labour leadership contest.
Sterling had come under intense pressure last week as mounting speculation over Prime Minister Keir Starmer’s future triggered a sharp rise in UK borrowing costs and rattled gilt markets.
However, market sentiment improved on Monday after Starmer avoided an immediate challenge and potential leadership contender Andy Burnham sought to reassure investors that he would continue to support Labour’s current fiscal framework if he eventually entered Westminster politics.
The easing in political tensions helped UK bond yields retreat from their recent near-18-year highs and provided Sterling with room to recover.
The Pound also found support after the International Monetary Fund upgraded its UK growth forecast for 2026 from 0.8% to 1%, citing Britain’s ‘strong pre-war momentum’ despite disruption caused by the conflict in the Middle East.
Meanwhile, the Euro (EUR) also found some support through Monday’s session as the single currency benefited from its negative correlation with the softer US Dollar.
The retreat in the US Dollar helped underpin EUR demand, although a lack of fresh Eurozone economic data prevented the common currency from establishing a stronger directional trend.
As a result, the Euro struggled to keep pace with the recovering Pound.
GBP/EUR Forecast: UK Labour Data and BoE Commentary in Focus
Looking ahead, Tuesday’s UK labour market report could become the next key driver for Sterling sentiment.
Economists forecast the unemployment rate to remain steady at 4.9% in the three months to March, while wage growth is also expected to hold firm. Employment is forecast to rise by around 107,000.
A resilient labour market release may reinforce expectations that the Bank of England (BoE) could still consider raising interest rates later this year, particularly if wage pressures remain elevated.
Investors will also closely monitor comments from BoE Deputy Governor Sarah Breeden for additional policy signals.
For the Euro, the absence of major Eurozone economic releases could leave EUR vulnerable to broader market sentiment and external drivers through Tuesday’s trade.
