The Euro rises to 0.8665 against the Pound as UK instability and ECB hawkish signals weigh on Sterling demand.
The EUR/GBP pair climbed to 0.8665 in early European trading, driven by political uncertainty in the UK and hawkish signals from the European Central Bank. UK Prime Minister Keir Starmer faces mounting pressure after Labour Party losses in recent elections, fueling concerns over stability and pushing gilt yields higher.
Markets are pricing in a 92% chance of a 25 basis point ECB rate hike in June, with three hikes expected by 2026. ECB officials, including Martin Kocher and Isabel Schnabel, have reinforced expectations for tighter policy amid persistent energy price pressures.
The Pound’s decline reflects broader risk aversion, while the Euro benefits from the ECB’s stance. Traders await ZEW survey data from Germany and the Eurozone later today for further direction.