Euro Pound Trading Near Monthly Highs
EUR/GBP held near one-month highs as the Euro stayed steadier than the Pound during the month-long Middle East war. ECB policymakers have pointed to a possible rate rise due to higher inflation pressures, while Bank of England Governor Andrew Bailey downplayed near-term tightening. The main Eurozone event on Monday is the Sentix Investor Confidence index, which may reflect the effects of the Iran war and energy shock. Sentix is a monthly survey of about 1,600 financial analysts and institutional investors, and it is built from 36 indicators. The survey measures views on the current economy and expectations for the next six months. Higher readings tend to support the Euro, while lower readings tend to weigh on it. Looking back at the market mood in 2025, we see the EUR/GBP pair was trading near one-month highs around 0.8720. This was driven by significant fears of a wider war involving Iran and the expectation that the European Central Bank would raise rates while the Bank of England would not. That geopolitical risk premium has since vanished from the market.Shift In Monetary Policy Outlook
The major divergence in monetary policy that we saw as a possibility then has now completely shifted. In 2025, the ECB was seen as hawkish, but today in April 2026, the discussion is about which central bank will cut interest rates first. Recent data shows UK service sector inflation remains stubbornly higher at 5.8% compared to a faster decline in the Eurozone, making the BoE’s job more difficult. This change in outlook has weighed on the EUR/GBP, pushing it away from those 2025 highs. We are now trading closer to the 0.8550 level, as the Pound finds support from the idea that the BoE may have to delay rate cuts longer than the ECB. The old resistance level near 0.8700 now appears very distant. For derivative traders, this suggests a change in strategy is needed. The environment no longer favors expecting big upward moves in the pair. Selling call options with strike prices at or above 0.8650 could be a prudent approach to take advantage of the new reality and decaying volatility. The Sentix Investor Confidence mentioned last year continues to be a relevant data point for us. The latest reading for April 2026 has improved from the deep lows but remains negative at -5.9, showing that underlying confidence in the Eurozone economy is still fragile. This weak sentiment provides little fuel for a significant rally in the Euro against the Pound. Create your live VT Markets account and start trading now.
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