File image of Andrew Bailey who makes no less than three appearances this week. Image © Pound Sterling Live, Still Courtesy of Bloomberg TV.
Week-ahead forecast: Pound sterling's underlying trend against the euro remains constructive, but repeated failures at 1.1600 suggest the pair is not yet ready for a sustained upside break.
The balance of probabilities favours further range trading with a mild sterling-positive bias, with support expected around 1.1500–1.1460 and resistance remaining firm at 1.1600.
Unless that ceiling gives way, gains are likely to remain gradual rather than explosive over the coming days.
The pound to euro exchange rate rose to the 1.16 ceiling again last week aided by the UK's high relative interest rate yield and broadly constructive global investor sentiment.
However, a lack of clear catalysts, potential month-end flows and setbacks in Middle East tensions all conspired with the resistance ceiling to deal GBP/EUR a setback.
That was an outcome we expected as we thought at the time there was not enough 'good news' in pound sterling's camp to trigger a break of a level that has frustrated sterling bulls since July 2025.
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Yet, the pair remains comfortably above the rising trendline that has underpinned trade since November and above the key 1.1464 support zone, preserving the broader sequence of higher lows that defines the medium-term uptrend.
The 50-day moving average is broadly flat around 1.1520–1.1530 and price is oscillating around it, which is usually characteristic of a market lacking strong directional conviction.
That contrasts with the rising trendline beneath the market, creating a narrowing range between ascending support and horizontal resistance.
Such structures often resolve with a larger move, but until a breakout occurs traders tend to fade moves at the extremes.
Technical triggers to watch:
Above 1.1600: bullish breakout, opening the way toward 1.1650 and potentially 1.1700.
Below 1.1460: deterioration in the bullish structure, exposing 1.1430 and potentially deeper retracement risks.
In the coming week, direction will be determined by the broader risk tone of markets, with the rule being that the pound is typically well supported when sentiment is constructive.
A series of record highs in U.S. indices confirms we remain in a bull market, and that can underpin the pound.
Headwinds would come in the form of an escalation in U.S.-Iran tensions in the Persian Gulf, although progress towards a deal is widely expected, even if this isn't the week it arrives.
Domestically, Andrew Bailey, Governor of the Bank of England, is in the frame, with three appearances planned.
He should give an updated view on what the Bank is thinking regarding inflation and the future of interest rates. Here, the message should be that the Bank expects inflation to rise in the coming months, but that it's been encouraged by May's undershoot in the inflation data.
With rate cuts off the table, the UK's yield advantage will persist, and that's supportive of GBP/EUR.
Bailey's appearances:
Tuesday 2 June (3:00 pm): Oral evidence to the Lords Economic Affairs Committee in Parliament.
Thursday 4 June (4:40 pm): Headline speech at the Investment Association Annual Conference 2026.
Friday 5 June (7:00 pm): "In conversation" with economists Ed Balls and Stephanie Flanders at the 250th Anniversary of Adam Smith's Wealth of Nations event in Kirkcaldy, Scotland.
