The Euro rebounded against the British Pound on Tuesday after earlier falling to a six-day low, driven by contrasting interest rate outlooks from the European Central Bank (ECB) and the Bank of England (BoE), FX Street reported. The ECB is widely expected to raise its deposit rate on Thursday, while BoE Governor Andrew Bailey’s cautious remarks have weighed on the Pound, which weakened against most major currencies.
Scotiabank strategists noted that while GBP/USD showed slight softness, it remains supported by expectations of further BoE tightening through to year-end. Meanwhile, EUR/USD held above the 1.1600 level, trading within a 28-pip range and closing just half a pip from its opening price on Tuesday. European gas prices also surged to a three-year high, adding to regional market dynamics.
For Japanese investors, these developments highlight the ongoing divergence in monetary policy between Europe and the UK, which could influence FX volatility and cross-currency strategies in the months ahead.