Home Daily Commentaries GBP/EUR reached 22-month highs

GBP/EUR reached 22-month highs

Daily Currency Update

GBP/EUR reached highs not seen since February 2020 on Monday and is still rallying and testing the psychological 1.20 handle. Some of Sterling’s recent strength against the euro could be due to growing expectations of divergence between the European Central Bank and the Bank of England. The UK government’s decision not to lockdown due to increased COVID-19 cases has kept the prospect of a second post-pandemic BoE rate hike in February alive and due to the continuation of all business functions has kept the UK economy afloat.

Key Movers

ECB Governing council member Isabel Schnabel said that the ECB would need to act to curb inflation. She implied that if the ECB is forced to upgrade its 2023 inflation forecast above 2.0% from its current 1.8%, then the central bank may axe its quantitative easing buying in 2022 and start their interest rate hikes in 2023.
In the US, Federal Reserve chair, Powell, is scheduled to speak on Tuesday afternoon.

Expected Ranges

  • GBP/USD: 1.3540 - 1.3720 ▲
  • GBP/EUR: 1.1905 - 1.2070 ▲
  • GBP/AUD: 1.8865 - 1.9010 ▲
  • EUR/USD: 1.1285 - 1.1455 ▲