The British pound rises to its highest level since May against the euro, with the Bank of England's interest rate decision becoming the focus

The GBP to EUR exchange rate hit its highest level in nearly five months, as markets are optimistic ahead of the Bank of England’s upcoming interest rate decision. According to market surveys conducted by Jin10 Data Platform, traders generally expect the Bank of England to keep interest rates unchanged, which directly contributed to the rise of the pound.

Market Consensus on the Interest Rate Decision

Senior analyst Li Hardman from Mitsubishi UFJ Group noted in a recent report that current UK economic data shows clear signs of recovery, prompting market participants to adjust their expectations for the timing of the next rate cut. He emphasized that the UK’s economic rebound has led the market to delay its expectations for a rate cut.

The Bank of England May Adopt a Cautious Stance

Li Hardman further analyzed that, due to the lack of significant economic events recently that could trigger further rate cuts, the Bank of England is likely to adopt a cautious and conservative policy stance in the early part of this year, temporarily postponing additional rate reductions. This policy outlook adjustment has provided strong support for the pound, becoming a key factor in its appreciation against the euro. The shift in market expectations reflects a reassessment of the resilience of the UK economy and has reinforced investor confidence in holding GBP assets.