Libra vs Euro: Trading Opportunities in the GBP/EUR Pair

Understanding the GBP/EUR Pair

When we talk about the GBP/EUR cross, we’re looking at how many euros you need to buy one British pound. If you see the price at 1.17, it means you can acquire 1 pound with 1.17 euros. This pair is essential for traders seeking to capitalize on fluctuations between two of the world’s major currencies.

Unlike other major crosses, the pound versus euro has particular characteristics. It belongs to the minor pairs group and generates significant interest among European traders, especially after the Brexit referendum, which completely transformed the dynamics of these currencies.

The Impact of Brexit on the Pound vs Euro

Before 2016, the GBP/EUR cross hovered around €1.30. But since Brexit, everything changed. The pound experienced a historic drop — the largest in 30 years in a single day — and since then has mostly traded between 1.06 and 1.21 euros.

Two additional declines in 2017 and 2019 pushed the pound to new lows against the euro. Why? Trade frictions, political uncertainty, and massive sell-offs of sterling assets constantly pressured the British currency.

In 2022, the exchange rate started at the highest levels of the five-year range but gradually declined toward the end of the year. By January 2023, the pound hit €1.124, its lowest level against the euro since September.

Key Data on the GBP/EUR Exchange Rate

Current status: Closing price 1.120€

Monthly performance: -1.45%

Quarterly performance: -2.03%

52-week range: 1.0786 - 1.2190€

All-time high: 1.752€ (May 2000)

All-time low: 1.02€ (December 2008)

These numbers reveal that the current pound operates in a lower territory compared to its long-term history. However, it doesn’t make sense to expect a quote that may never return. The important thing is to analyze the range of recent years as a valid reference for trading.

What Moves the GBP/EUR

The GBP/EUR pair responds to multiple factors. Macroeconomic indicators such as GDP, inflation, interest rates, manufacturing activity, and unemployment drive these movements. But there is also an important psychological component.

Market sentiment: Uncertainty over Brexit negotiations keeps pressure on the pound. More recently, the impact of the Russia-Ukraine war on inflation has been a decisive factor for both economies.

Pair liquidity: GBP/EUR is highly liquid, while EUR/GBP is less so. When one pair has more liquidity than another, the deviation increases with market volatility.

Monetary Policies: The True Differentiator

Both the Bank of England and the European Central Bank have raised interest rates to combat inflation. But if this strategy diverges in the future, it could significantly impact the pair’s price.

Economic forecasts show divergent prospects: zero growth is expected for the UK in 2023, while the Eurozone anticipates modest growth. This economic difference favors the euro in the pound vs euro equation.

Additionally, the UK economy is projected to enter recession in the coming quarters, with an anemic recovery expected in 2024. Meanwhile, inflation could reach 11% by then — a worrying figure that would keep pressure on the pound.

How to Take Advantage of GBP/EUR Fluctuations

If you want to trade this pair, Contracts for Difference (CFD) are the ideal tool. With CFDs, you don’t need to physically own euros or pounds. Instead, you speculate on the price direction without holding the underlying assets.

The concept is simple: if you believe the price will rise, open a long position (long). Your profit will be the difference between your entry price and your exit price. If you expect a decline, do the opposite (short) and profit when the price drops.

Practical Tips for Trading GBP/EUR

Understand the pair correctly: In GBP/EUR, the pound is the base currency and the euro is the quote. You observe how many euros you need to buy pounds.

Don’t ignore low volatility: Although GBP/EUR shows moderate volatility (its values do not frequently undergo abrupt changes), this is precisely what makes the pair interesting. Significant changes signal market alerts, and those moments are opportunities.

Sync with the economic calendar: Follow economic news from both countries. Announcements about interest rates, employment data, or inflation forecasts can trigger movements.

Trade during European hours: The best opportunities occur during the European forex session, especially between 08:00 - 17:00 London time. This schedule concentrates about 35% of daily forex volume and the highest volatility.

Analyze trends: Before executing trades, identify ongoing tendencies. Use technical analysis and valuation studies to anticipate future movements.

The Importance of Timing in GBP/EUR

The pound has recently stabilized against the euro due to a lighter economic calendar. However, the next major catalyst will be the Bank of England’s rate announcement. Markets are watching inflation expectations ahead of this statement.

The more cautious approach of the Bank of England has weighed on the currency, although positive employment figures may suggest risks are tilted upward for the pound in the short term.

What Matters More: Euro or Pound?

In 2022, the pound fluctuated between €1.08 and €1.21. In early December, it was the best-performing currency, but just before Christmas, it lost ground. In January 2023, it fell to its weakest level since September.

This reflects that the question isn’t what is “worth more,” but how its relationship changes. And those changes are precisely what generate trading opportunities.

Conclusion: Your Strategy with GBP/EUR

The GBP/EUR cross is one of the most watched in the forex sector. The key to achieving favorable results is staying updated with economic trends, news from both countries, and important announcement calendars.

Although the pound has shown weakness since Brexit, recent movements suggest the pair still offers attractive opportunities. Market sentiment will continue to be decisive, as well as any changes in monetary policies between the Bank of England and the European Central Bank.

Remember: there are no guarantees of profit in Forex. Only invest what you can afford to lose. But with proper analysis and correct timing, the pound vs euro pair can be an interesting way to multiply your capital.