Euro Gains Ground as ECB Rate Hike Expectations Rise

The Pound to Euro (GBP/EUR) exchange rate fell by 0.2% on Monday, returning to its lower end of range established in August.

This decline came as renewed expectations for a European Central Bank (ECB) interest rate hike gave the Euro an advantage over Sterling.

The ECB's hawkish stance was supported by German inflation data, which showed headline inflation accelerating to 2.9% and energy inflation rising to 10.5% in August.

The contrast with the Bank of England (BoE) rate outlook has become more significant for GBP/EUR, as expectations for the next BoE hike have slipped into 2027, pricing less than one full increase by December.