Pound Sterling Breaks to Fresh 5-month Best Against Euro

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Best level for euro buyers since August as global risk sentiment improves.

The pound to euro exchange rate (GBP/EUR) is making a fresh break higher, reaching 1.1584 in late New York trade.

The rally takes the GBP/EUR to its highest level since August 28, taking the best exchange rate on 0%-fee money transfers to 1.1550.

Gains look to be a function of improving global risk sentiment; we detect the lift in GBP/EUR to be linked to a strong recovery in the U.S. S&P 500 index, which is usually considered the proxy for global sentiment.

Analysts say the rise in stocks is linked to good news on the U.S. economy, where manufacturing activity expanded the most since 2022. The ISM Manufacturing PMI survey rose to 52.6 in January 2026, rebounding from a three-month slide through the fourth quarter of last year.

The S&P 500 halted a three-day slide to register a solid gain; that in turn lifted GBP/EUR from 1.1530 to 1.1580.

Above: The S&P 500 rises, taking GBP/EUR (lower panel) higher.

The pound-euro is considered a risk-on currency pair, meaning that it tends to rise when investor sentiment is upbeat.

This is particularly true in the absence of UK-specific drivers, such as politics and economic data.

Scanning the markets shows that the quintessential risk-off currencies, the Swiss franc, are under the most pressure. The franc is a go-to when markets are nervous, and its declines in Monday trade would reflect the view that global sentiment is firmly in charge of FX.