GBP v EUR falls by 1-cent

logo18year
Daily Market Report
Currency insight from
Excel Currencies
banner1

waterman

Written by Dan Waterman
February 5th 2026
The Pound once again falls in the build-up to a BoE meeting..

Just when things were looking rosy, Sterling gets hit by a triple whammy.

Global stocks, precious metals & Crypto have been hit hard the last 48-hours and the safe-haven currencies (USD, EUR, JPY, CHF) have all gained in value. This means global risk sentiment has turned negative (AI bubble concerns again) and that's bad news for the Pound.

As I wrote earlier in the week, historically the Pound falls in the build-up to a BoE meet. This is for various reasons, but mainly has been down to the voting divergence on what to do with interest rates at the central bank causing investors to get concerned the powers at be really don't know what to do.

But the real reason for GBP's drop over the last 18-hours started in parliament yesterday..

Prime Minister Starmer admitted he knew damning details about Peter Mandelson before appointing him to be the ambassador to the US. Headlines this morning are leading with an upcoming Labour MP revolt and political uncertainty is bad business for the correlating currency.

The major risk traders have expressed countless times with Labour leadership is what finances could look like if a more radical leftist approach takes the reigns. Supposedly there is now a 60% chance Starmer gets ousted by the end of the year and will be replaced by Andy Burnham. 

GBP v EUR has lost the last 7-days of gradual gains and finds itself 1-cent lower.

Again as I have explained in a report recently, this was on the cards anyway and is just the nature of the beast (FX market) unfortunately and to manage expectations in that nothing ever just keeps on going up.

It means the strong resistance barrier of £-€1.1550 mid-market is back in play, but first the pair has to first fight its way back into the 1.15's comfortably. Expect more volatility today with both the EU & UK central bank decisions.