Sterling close to 3-month high versus euro as markets bet on ECB rate cuts

Sterling hovered around its highest levels in almost three months against the euro on Tuesday, as markets raised their bets on rate cuts by the European Central Bank, which widened their divergence with the Bank of England. Money markets fully price in more than 140 bps of ECB rate cuts next year — from around 135 bps the day before — with the first move in March, while almost fully discounting a first BoE cut in June 2024. Sterling was flat at 85.80 pence per euro.