Pound Euro (GBP/EUR) Exchange Rate Ticks Up amid Upbeat Trade

December 10, 2024 - Written by Ben Hughes

STORY LINK Pound Euro (GBP/EUR) Exchange Rate Ticks Up amid Upbeat Trade

The Pound Euro (GBP/EUR) exchange rate firmed on Monday as the currency pair was underpinned by the start of the week’s cheery market conditions.

On Monday, the Euro (EUR) had a tough time attracting investor interest due to a combination of sparse economic data and a generally positive market sentiment, which tends to diminish the appeal of the common currency.

As a safe-haven asset, the Euro often loses ground when market conditions are optimistic, making it less attractive compared to higher-risk currencies.

Investors were also likely hesitant to make any significant moves on the Euro ahead of the European Central Bank's (ECB) interest rate decision, which is set to be announced on Thursday.

On Monday, the Pound (GBP) managed to strengthen against several of its counterparts, even in the absence of any UK data releases, thanks to the positive trading conditions at the start of the week.

As a currency that is becoming more sensitive to risk, GBP exchange rates benefited from the optimistic market sentiment on Monday.

However, with little other support, the Pound's gains were relatively modest, with Sterling primarily firming against safer currencies rather than its riskier peers.

GBP/EUR Exchange Rate Forecast: Eurozone Interest Rate Decision to Drive Movement

Looking ahead, the main factor influencing the Pound Euro exchange rate this week will likely be the European Central Bank’s (ECB) upcoming interest rate decision, scheduled for release on Thursday.

Markets are expecting another 25-basis point cut from the ECB this week, which would bring the rate down from 3.25% to 3.00% following a similar 25-basis point reduction in October.

If the ECB does implement another rate cut this month, the Euro is likely to weaken against its peers due to the further easing of monetary policy within the Bloc.

For the Pound, UK economic data will be scarce for most of the week, meaning GBP exchange rates will probably be driven by market sentiment and risk appetite.

Should Monday’s upbeat trade prevail into the week, GBP exchange rates could be buoyed.

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TAGS: Pound Euro Forecasts