The Pound was trading close to 1.18 against the Euro on Monday after dropping from a one-year high of 1.1874 on Friday.

Official figures published last week showed a surprise drop in UK retail sales in September, yet the IHS Markit surveys indicated the economy had regained momentum this month, whilst Chief Economist at the Bank of England Huw Pill clarified the interest rate outlook last Thursday.

"The big picture is, I think, there are reasons that we don't need the emergency settings of policy that we saw after the intensification of the pandemic," Pill stated.

The change in the central bank’s interest rate forecast has bolstered the Pound-to-Euro rate and could boost the Pound’s appeal more this week if the European Central Bank doubles down on previous guidance that interest rates in the eurozone would likely stay the same for some time.

Nevertheless, before then BoE Monetary Policy Committee member, Silvana Tenreyro is making a speech on international trade, global supply chains, and monetary policy, and the autumn budget is coming up on Wednesday, which are both neutral-to-negative risks for the currency, reports Pound Sterling Live.

“Aside from what we think will be a fairly tight Budget and Spending Review on Wednesday, it will be interesting to see if any other MPC members drop in their two cents on the outlook for interest rates before the week-long purdah period begins ahead of the policy meeting on 4th November. As it stands, Silvana Tenreyro is the only member scheduled,” said Paul Dales, chief UK economist at Capital Economics.

The Pound-to-Euro rate has held on to the 1.18 handle since surpassing the level earlier this month. This extended a two week-long rally that took place amid the market’s reappraisal of the BoE interest rate outlook, which led to aggressive expectations for Bank Rate to rise to 1% in 2022.

"This was extremely negative price action," said Karen Jones, head of technical analysis for currencies, commodities and bonds at Commerzbank, in reference to EUR/GBP’s break below the 0.8471 area and GBP/EUR’s move over the 1.1804 mark.