Proactive Investors - In good news for Brits holidaying in Europe this summer, the pound has hit its highest against the euro in 21 months.
Sterling rose 0.2% versus the single currency to £0.849, its highest level since August 2022, though has since eased back.
The reason is that investors are becoming ever more confident that the European Central Bank will cut interest rates next week, earlier than the Bank of England, which is now expected to wait until August, September or even November.
This morning, Reuters reported that all 82 economists it polled predict that the ECB will cut rates by a quarter of a percent next week.
The majority also expect two further reductions, in September and December, though financial markets are pricing in only two ECB cuts in total this year.
Earlier this week, the ECB's chief economist shrugged off fears about the European central bank cutting rates before the US Federal Reserve.
Philip Lane said in a speech that inflation dynamics and "the strength of monetary policy transmission" had further increased the ECB governing council's confidence that inflation is retreating towards its target and so "it would be appropriate" to reduce rates.
French central bank chief Francois Villeroy de Galhau, who is another of the 26 members of the ECB’s governing council, said: "Barring a surprise, the first rate cut in June is a done deal."