MUFG Research discusses EUR/GBP outlook.
"The pound has strengthened sharply against the euro since the end of last month as the euro sell-off has broadened out. It has resulted in EUR/GBP falling from just above the 0.8600 to a fresh year-to-date low yesterday of 0.8448. EUR/GBP is moving back closer to levels that were in place prior to President Trump’s Liberation Day tariffs announcement back in April of last year when it was trading between 0.8200 and 0.8400 between September 2024 and March 2025. Negative development in the euro-zone have boosted the relative appeal of the pound," MUFG notes.
"While fiscal concerns are also in focus in the UK with 10-year Gilt yields hitting their highest levels since prior to the Global Financial Crisis in 2007, they are not as acute as in France currently. Media reports have suggested that the Labour government is well aware of challenging global bond market conditions ahead of this month’s budget scheduled for 28th October which is encouraging them to play it safe as they seek to limit the risk of negative market reaction. A development that would help to ease downside risks for the pound," MUFG adds.
