Pound surges to highest stage towards the euro for greater than two-and-a-half years as ECB eyes pressing price cuts

The pound hit its highest level against the euro for more than two-and-a-half years yesterday.

Sterling’s surge came as the European Central Bank (ECB) prepares to cut interest rates to prop up the struggling economy.

The pound rose as high as €1.2136 – just shy of the €1.2189 it reached in March 2022. It has not been higher than that since the Brexit vote in 2016.

It came as investors bet that the ECB will cut rates again tomorrow in a bid to kick-start the eurozone economy.

By contrast, the Bank of England is expected to leave rates unchanged next week. 

Lower interest rates tend to weaken a currency so the prospect of a rate cut in the eurozone, but not the UK, has pushed the euro lower against the pound.

Rally: The pound rose as high as €1.2136 – just shy of the €1.2189 it reached in March 2022. It has not been higher than that since the Brexit vote in 2016