Sterling Set for Biggest Daily Rise Against Euro in Months

LONDON: Sterling was on track on Monday for its strongest one-day gain against the euro in several months, as concerns over France’s fiscal position weighed on the single currency.

The euro fell 0.41% against the pound to 84.60 pence, its lowest level in almost three months and its sharpest daily decline since July 15. The move marked the euro’s sixth consecutive daily fall against sterling.

The euro was also under pressure against the US dollar, reaching a 17-month low as investors assessed concerns over France’s ability to reduce its budget deficit. Rising French government bond yields and political uncertainty have increased market concerns about fiscal stability in the euro zone.

Sterling, meanwhile, edged higher against the dollar, supported partly by expectations that the British government would maintain fiscal discipline and by signs of a more constructive approach towards relations with the European Union.

The pound has strengthened since late September, with comments from Bank of England Governor Andrew Bailey and Deputy Governor Dave Ramsden reinforcing expectations of tighter monetary policy.

Investors are also monitoring Britain’s forthcoming budget, scheduled for October 28. Analysts said developments in European bond markets had reduced sterling’s vulnerability against the euro, while broader monetary-policy expectations remained an important factor for the British currency.

Energy prices and the economic impact of the conflict in the Middle East also remained in focus. Brent crude prices declined on Monday amid increased Middle Eastern oil exports and the release of oil stocks by Group of Seven countries.

The currency movements come as markets assess diverging fiscal and monetary conditions across Britain, the euro zone and the United States. Continued concerns over European public finances could provide further support for sterling against the euro, although broader economic and policy developments remain important to the pound’s outlook.