Pound Sterling has been trending upward against the Euro, though the near term may see more fluctuations and uncertain movement. Recently, the GBP/EUR exchange rate has hovered around the nine-day moving average, as investor interest in buying or selling fades whenever the rate deviates too significantly. The 9-day moving average currently sits around 1.20, a significant psychological barrier that GBP bulls have struggled to break. Previous analysis suggested that selling pressure around the 1.2030–1.2050 range becomes pronounced due to retail interest, as this level allows providers to offer euro buyers the attractive 1.20 mark. Consequently, speculators aware of this dynamic tend to sell in this range, which limits further strengthening of Pound Sterling.

Near-term developments may be impacted by external economic factors, including Friday's U.S. jobs report and the upcoming U.S. presidential election. GBP/EUR is notably responsive to global investor sentiment and often experiences pressure when stock markets decline. Currently, both stock markets and the Pound-Euro rate are in a bull run, reaching two-year highs over recent months. This trend could continue toward the year-end, though a strong U.S. jobs report may introduce volatility, potentially bringing GBP/EUR below 1.20 by week’s end. While speculation about the U.S. election outcome is abundant, analysts do not foresee a major impact on the GBP/EUR rate. In general, market expectations favour a stable election outcome, which may support continued GBP strength through the end of the year.

Key domestic events will also shape GBP movements, with the UK budget announcement expected on Thursday. The market anticipates a challenging budget for businesses and investors, with potential tax rises posing risks to UK growth. However, it is likely to be an expansionary budget, given the Chancellor's revised fiscal rules to allow for increased borrowing intended to fund growth-boosting projects. Analysts estimate these investments could raise growth by 0.5% in 2025, a development which could lead the Bank of England to approach rate cuts cautiously, supporting GBP in the longer term. Although increased borrowing could raise concerns in the market, reminiscent of the reaction to the 2022 mini-budget, analysts currently suggest such a scenario is unlikely, minimising the downside risk to GBP.