Sterling sees best month against euro in over a year
Sterling rose 1% against the euro in March as traders anticipated Bank of England rate hikes. The currency fell 2.1% against the dollar due to energy shocks.
The British pound is on track for its strongest monthly performance against the euro in over a year, driven by a sharp rise in domestic short-term borrowing costs. While the currency has found support against continental peers, it has simultaneously faced its steepest monthly decline against the dollar in five months as the ongoing conflict in Iran continues to unsettle global markets. In the United Kingdom, the shift in interest rate expectations has been a primary catalyst for currency movements. Market participants have pivoted from expecting two rate cuts by the Bank of England this year to anticipating at least two rate hikes. This hawkish turn sent rate-sensitive two-year yields up by 94 basis points in March, a more aggressive move than those seen in the United States or the euro zone.
