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GBP - Could GBP/EUR break €1.1600 in coming weeks?
While the UK was on holiday, GBP/EUR rose 0.22% and ended just under the key €1.1600 level.
The pair has struggled to break above €1.1600 since July 2025, with three failed attempts already this year. Selling pressure near this level has repeatedly capped gains and pushed the exchange rate back into its established range.
But could this be the week Sterling finally pushes past €1.16 against the Euro?
Momentum remains positive, with GBP/EUR climbing steadily since last November after Rachel Reeves’s budget passed smoothly. If that trend holds, a break above €1.16 looks likely.
The Pound is also supported by the UK’s interest rate advantage over the Eurozone. The Bank of England is still expected to raise rates twice this year, keeping UK bond yields above European equivalents.
If market volatility stays low and sentiment remains supportive, Sterling could continue to benefit from foreign capital seeking higher yields.
Those needing to convert GBP to EUR may want to secure part of their budget now in case resistance holds once again and the pair fails at €1.16 for a fourth time this year.
No Major Data
Speaker
Friday 09.20: Bank of England Gov Bailey
EUR - Whatever happened to three ECB rate hikes?
Markets have sharply reduced expectations for ECB tightening this year, cutting pricing from over 80bp to 55bp as softer European PMI data points to a likely second-quarter slowdown. The ECB is expected to raise rates just once more, in June.
EUR/USD fair value still looks closer to €1.16–1.17 rather than €1.1500, although weaker European data and renewed Fed hike speculation could still push the pair lower.
This week’s Eurozone inflation and GDP data are unlikely to trigger major moves, with low EUR/USD volatility expected to persist. Markets may instead favour downside trades in EUR/AUD, supported by Australia’s higher yields and expectations of further Reserve Bank of Australia rate hikes.
Data
Wednesday 09.00 ECB Financial Stability Review
Speaker
Thursday 08.20 ECB President Lagarde
USD - Fed story provides support
Despite stronger equity markets on Monday’s de-escalation trade, the Dollar has remained resilient as investors expect the Federal Reserve to turn less dovish while softer global data limits how aggressively other central banks can tighten.
Fed Governor Christopher Waller reinforced this view last week, warning that persistently high oil prices could force further rate hikes if inflation expectations rise. Markets briefly priced in a full 25bp Fed hike, boosting the Dollar.
This week, attention turns to US jobs and inflation data, including Thursday’s PCE release. Any upside inflation surprise could strengthen expectations of another Fed hike and support the Dollar further.
A steady Dollar may also allow local themes to drive markets, with the Reserve Bank of New Zealand expected to strike a more hawkish tone that could support the New Zealand Dollar.
Data
Thursday 13.30: Prelim GDP q/q.
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