Pound To Euro Week Head Forecast: Tilting Higher

The Pound to Euro (GBP/EUR) exchange rate traded in a narrow range on Monday as markets weighed fresh geopolitical concerns linked to US comments on Greenland.

DAILY RECAP:

The Euro (EUR) traded with mixed momentum on Monday amid renewed geopolitical unease after comments from US President Donald Trump regarding the future of Greenland.

Speaking overnight, Trump said the US would take Greenland “one way or the other”, reviving fears that Washington could consider military action against NATO ally Denmark.

The remarks highlighted growing friction between the US and the EU at a sensitive time, with European leaders still seeking American backing in efforts to resolve the Russia-Ukraine war.

These concerns weighed on the single currency, although losses were cushioned by EUR’s strong inverse relationship with the US Dollar, which weakened on Monday amid concerns over the independence of the Federal Reserve.

Meanwhile, the Pound (GBP) traded quietly as a lack of UK economic data left Sterling moving largely in line with broader market sentiment.

Despite the cautious mood, the increasingly risk-sensitive Pound managed to hold its ground against the Euro, supported by relative stability in UK policy expectations and modest USD weakness.

Near-Term GBP/EUR Forecast: Geopolitical Headlines to Drive Direction?

Looking ahead, movement in the Pound Euro exchange rate is likely to remain driven by geopolitical developments, with economic data thin on the ground on Tuesday.

EUR investors will be closely watching developments surrounding Greenland, ahead of a scheduled meeting between Greenland and Denmark’s foreign ministers and the US Secretary of State later this week. Any further rhetoric suggesting US willingness to use force could apply fresh pressure to the Euro.

At the same time, headlines linked to the Russia-Ukraine conflict remain a key risk factor for the single currency.

For the Pound, upside against the Euro may be capped if broader risk appetite deteriorates, as heightened geopolitical anxiety tends to weigh on risk-sensitive currencies such as Sterling.