The meeting between Keir Starmer & Donald Trump has gone down very well with financial markets. "Tariffs won't be necessary" was the main headline along with confirmation of just how 'special' the UK-US relationship is and will continue to be under the new leaderships.
With the UK not 'tariffable' to the US, it creates confirmation of another huge divergence between the UK and EU. It's for this reason, the Pound has gained further ground this week against most currencies, but in particular the Euro.
Is Sterling in overbought territory against the Euro though?
Quite possibly yes. We can probably see a natural drop back at some point in the coming weeks, as it has been an aggressive climb up and currently we are seeing the rate above any expected trading range. Or, we may continue to see the run go on for a bit longer yet.
However, please be aware we would likely see a fairly large turnaround in fortunes for £-€ if no trade tariffs come for the EU via the US (energy deal is still on the table) and another downgrade if either the ECB or BoE change their interest rate path (50-50).
For now, the pair is almost at a 9-year high...
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