- EUR/GBP is increasing its upward momentum as sterling struggles amid growing stagflation concerns in the UK.
- Sterling faces challenges as the UK 30-year gold yield has risen to 5.36%, its highest level since 1998.
- ECB Lane indicated that further interest rate cuts are likely as the central bank tries to avoid a slowdown in the economy.
The EUR/GBP exchange rate is strengthening for the fourth day in a row, reaching a level of close to 0.8410 during Monday’s European session. The currency is gaining strength as the pound sterling (GBP) continues to underperform, supported by concerns about stagflation in the UK amid persistent inflation and stagnant economic growth.
The recent rise in UK government bond yields has raised concerns about the country’s fiscal health. The UK 30-year government bond yield has risen to 5.36%, its highest level since 1998, adding to challenges for Chancellor of the Exchequer Rachel Reeves and further deteriorating sentiment around sterling.
Investors are withdrawing from British bonds on fears of rising debt, ponderous growth and the risk of inflation. These concerns contribute to GBP’s relative weakness, supporting the bullish outlook for EUR/GBP.
In the euro zone, rising expectations of further policy easing by the European Central Bank (ECB) are weighing on the euro and limiting the advantage of the EUR/GBP pair. Traders remain cautious amid uncertainty that protectionist policies under US President-elect Donald Trump will lead to a global trade war, reducing the attractiveness of risk-sensitive assets such as the euro.
On Monday, during the Asian Financial Forum (AFF) 2025, ECB Chief Economist Philip Lane said that additional interest rate cuts were likely as the central bank aims to prevent the economy from slowing down too much. Lane stressed the importance of taking a balanced approach, meaning “neither too aggressive nor too cautious,” in policymaking this year.
At the same event, ECB policymaker Olli Rehn stressed that Europe must avoid being caught off guard by a potential trade war, stressing that the European Union (EU) should not bear the burden of tariffs. Rehn also advocated continued interest rate cuts, considering them a prudent measure.
PRICE IN EURO today
The table below shows the current percentage change of the euro (EUR) against the main listed currencies. The euro was strongest against the British pound.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.22% | 0.47% | -0.14% | 0.02% | -0.05% | 0.05% | -0.06% | |
| EUR | -0.22% | 0.22% | -0.31% | -0.14% | -0.13% | -0.12% | -0.20% | |
| GBP | -0.47% | -0.22% | -0.54% | -0.35% | -0.36% | -0.34% | -0.43% | |
| JPY | 0.14% | 0.31% | 0.54% | 0.16% | 0.02% | 0.05% | 0.07% | |
| BOOR | -0.02% | 0.14% | 0.35% | -0.16% | -0.12% | 0.02% | -0.02% | |
| AUD | 0.05% | 0.13% | 0.36% | -0.02% | 0.12% | -0.01% | -0.07% | |
| NZD | -0.05% | 0.12% | 0.34% | -0.05% | -0.02% | 0.01% | -0.10% | |
| CHF | 0.06% | 0.20% | 0.43% | -0.07% | 0.02% | 0.07% | 0.10% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Euro from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
