Interest rate spread expectations widen, GBP/EUR hits a new high since 2022

Due to the expectation that the Bank of England's interest rate cuts will not be as large as those of the European Central Bank, the British pound rose to its highest level against the euro in two and a half years, trading at 1 euro to 82.50 pence. The pound also increased against the US dollar to 1.2758 dollars, marking its fourth consecutive week of gains. Analysts pointed out that strong economic growth and high inflation in the UK have led the Bank of England to adopt a cautious stance on interest rate cuts. It is expected that by the end of 2025, the Bank of England will ease rates by 82 basis points, with future rates remaining higher than those in the eurozone