EUR/GBP Consolidation Continues Amid UK Rates and US Sanctions

The EUR/GBP currency pair has been experiencing consolidation this week, following an initial gap higher against the Pound on Monday.

The euro's recent strength was influenced by German flash manufacturing PMI hitting its strongest level since 2022 due to defense spending, and Eurozone activity expanding in August with manufacturing improving.

However, the UK rates trade is flexing its muscles, and there are concerns about US sanctions on Iran potentially tightening oil supply further, affecting Europe's liquefied natural gas from Qatar.

The British pound might continue to strengthen due to a lack of Tier 1 UK releases this week, with the focus shifting to German IFO numbers tomorrow that could significantly impact the euro.