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The pound showed mixed performance on Monday—falling against the euro while rising against the US dollar. This movement followed European leaders’ announcement of plans to draft a Ukraine peace plan for the United States.
The euro gained 0.10% to reach 82.53 pence, with analysts expecting it to benefit most from any Ukraine peace deal. Germany’s consideration of increased fiscal spending further supported the euro’s position.
Meanwhile, Prime Minister Keir Starmer announced a £1.6 billion ($2 billion) deal for Ukraine to purchase 5,000 air-defense missiles using export finance.
Despite the pound rising 0.3% against the dollar to $1.2614 and recording its first monthly gain since September, experts remain skeptical about its future. ING forex strategist Francesco Pesole cautioned that the pound’s rally is unlikely to last, pointing to the upcoming UK budget announcement in late March as a potential source of pressure that could destabilize the “fragile gilt market.”
Bank of England Deputy Governor Dave Ramsden highlighted ongoing wage pressures in Britain as an inflation concern, though he suggested rate cuts might not necessarily be gradual. Investors are now focusing on Wednesday’s Treasury Committee questioning of BoE Governor Andrew Bailey as the week’s key financial event.
