Finance
Sterling Not Far From Early March Levels Against the Euro
Published by Global Banking & Finance Review®
Posted on April 7, 2026
2 min readLast updated: April 7, 2026
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Sterling edged up modestly on April 7, remaining close to early‑March levels against the euro (≈87.1 pence) and lingering near a four‑month low against the dollar, as heightened energy import concerns and geopolitical tensions weighed on the UK economy.
Sterling Edges Higher but Stays Near Early March Levels Against Euro
Market Overview and Currency Movements
By Stefano Rebaudo
April 7 (Reuters) - Sterling edged higher on Tuesday but remained near early-March levels against the euro and close to a more than four‑month low versus the dollar.
Factors Influencing Sterling's Performance
Britain is highly exposed to energy imports and investors remain nervous about the country's fragile public finances.
Impact of Global Events on Currencies
The greenback edged lower as traders kept a close watch on a U.S.-imposed deadline for Iran to reopen the Strait of Hormuz to shipping or risk attacks on its infrastructure.
Sterling and Euro Movements
Sterling was last up 0.30% at $1.3278. It hit $1.316 last week, its lowest since November 26.
The pound rose 0.1% to 87.14 pence against the euro on Tuesday. It was at 87.60 before the beginning of the war in Iran.
Expert Insights on the UK Economy
“The UK is not as lacking in self-sufficiency as the European Union,” said Matthew Ryan, head of market strategy at global financial services firm Ebury.
“The UK's energy dependency ratio of around 35% actually compares rather favourably with the EU average, while domestic generation of renewables perhaps offers a partial growth buffer,” he added.
Bond Yields and Central Bank Policy
Yields on British government bonds, which had surged through much of March amid inflation fears triggered by rising energy prices following the Iran conflict, eased in late March and early April.
Bank of England Governor Andrew Bailey said last week markets were still getting ahead of themselves by pricing in interest rate hikes by the central bank, which wants to avoid adding to the damage Britain’s economy faces.
“Although forex markets are currently reacting less to changes in interest rate expectations, this is nevertheless one of the reasons why we still anticipate higher euro-sterling levels in the coming months,” said Michael Pfister forex strategist at Commerzbank, after referring to Bailey’s remarks.
Business Sentiment and Inflation Expectations
Businesses in Britain's services sector reported the biggest month-on-month jump in costs in March since 2021, while a Bank of England survey showed last week that British companies expect to raise prices more quickly in the coming 12 months.
(Reporting by Stefano Rebaudo; Editing by Susan Fenton)
Key Takeaways
- •Sterling up ~0.1% to ~87.14 pence per euro, near levels seen in early March, reflecting sustained pressure from energy‑import vulnerability and fiscal fragility.
- •Geopolitical risks—particularly the U.S. deadline for Iran to reopen the Strait of Hormuz—are clouding global energy markets and reinforcing safe‑haven demand for the dollar.
- •UK’s comparatively lower energy import dependency (~35–38%) and strong renewables generation provide some buffer, though markets remain sensitive to inflation and rate‑hike expectations.
Frequently Asked Questions about Sterling not far from early March levels against the euro
1Why is sterling remaining near early March levels against the euro?
Sterling remains near early March levels against the euro due to concerns about the UK's energy imports and fragile public finances.
2How has the UK’s dependence on energy imports affected sterling?
The UK's exposure to energy imports has made investors nervous, impacting sterling's performance amid global energy price fluctuations.
3What are the current market expectations for Bank of England interest rates?
Despite ongoing economic concerns, the Bank of England aims to avoid aggressive rate hikes, noting that markets may be getting ahead of themselves.
4How did the Iran conflict influence British government bond yields?
The conflict led to rising energy prices which triggered inflation fears and initially boosted British government bond yields before easing in April.
5What recent trends have UK businesses reported concerning costs?
UK service businesses reported the largest month-on-month cost increase in March since 2021, with companies expecting faster price rises over the next year.
