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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 Monday and holding the gain through Tuesday’s Tokyo session.

The rally saw GBP/EUR break above its daily 200-day moving average and reach its highest level since August 28, taking the best exchange rate on fee-free money transfers to 1.1550.

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

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

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.

“Global markets were in recovery mode on Tuesday after last week’s turbulence in metals and recent equity volatility, with investors drawing confidence from resilient macroeconomic data and easing fears of a deeper correction,” says Shane Strowmatt, Senior Investment Writer at LGT Bank. “Wall Street had already started the week on a firmer footing with US equities rebounding on Monday as both ISM and S&P Global manufacturing surveys signalled expansion. European bourses also rallied.”

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.

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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 but it can underperform when stocks are rising.

Its decline through the Monday and early Tuesday sessions reflects the view that global sentiment is firmly in charge of FX.