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- EUR/GBP remains above 0.8250 as France, UK propose a one-month Ukraine truce
EUR/GBP remains above 0.8250 as France, UK propose a one-month Ukraine truce
- EUR/GBP edges higher after reports that France and the UK have proposed a one-month truce in Ukraine.
- French President Emmanuel Macron stated that the ceasefire aims to halt all air and sea conflicts.
- The British Pound remains supported as the BoE is expected to take a cautious approach to monetary easing.
EUR/GBP pauses its three-day losing streak, hovering around 0.8260 during Monday’s Asian session. The currency cross strengthens as the Euro (EUR) gains traction following reports that France and the United Kingdom (UK) have proposed a one-month truce in Ukraine.
In an interview with France's Le Figaro on Sunday night, French President Emmanuel Macron stated that France and Britain are advocating for a one-month ceasefire in Ukraine to halt all air and sea conflicts, as well as attacks on energy infrastructure. This announcement followed crisis talks in London, where European leaders reaffirmed their support for Kyiv, pledged increased security spending, and discussed forming a coalition to enforce any potential truce.
The Euro also found support from stronger-than-expected February flash Harmonized Index of Consumer Prices (HICP) data from Germany, released on Friday. Despite this higher inflation reading, the European Central Bank (ECB) is still expected to maintain its easing stance in Thursday’s policy meeting. Investors now turn their attention to the Eurozone’s HICP inflation data, set for release later today.
However, EUR/GBP’s upside could be limited as the Pound Sterling (GBP) remains supported by expectations that the Bank of England (BoE) will adopt a more measured approach to monetary easing compared to other major central banks.
Market sentiment suggests the BoE may proceed cautiously due to strong wage growth, with Average Earnings (excluding bonuses) in the three months ending December rising to 5.9%—the highest level since April 2024.
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Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
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