if interest rates are likely to go up how will this affect the sterling / euro exchange?

Answer 1

Depends on who's side you're talking about, but in general interest rates force money out of the economy as people save it, thus there'e less of it there. So if eurozone interest rates went up, the € would get stronger. Likewise if the BOE put up interest rates, £ would strengthen vs. the €. if both put rate up by same amount at the same time neutral effect occurs.