March 25, 2025 – Written by David Woodsmith
STORY LINK Pound to Euro Exchange Rate Close to 20-Day Best at 1.1970
Trade Fears Sap Euro Support, GBP/EUR Close to 20-Day Highs
The Pound to Euro (GBP/EUR) exchange rate is trading around 1.1970 and close to 20-day highs at 1.1980 recorded on Monday.
The Euro overall has lost ground with euphoria surrounding the German fiscal stimulus fading to some extent while trade concerns are looming large ahead of April 2nd when Trump has threatened to impose substantial tariffs on the Euro area.
ING commented; “If Donald Trump goes ahead with his threat of more tariffs against the EU next week, it would be a real blow to more exposed economies desperate to reverse stagnating trends.”
Credit Agricole forecasts that GBP/EUR will advance to 1.2050 by mid-year.
Geo-political developments will also continue to be monitored closely in the short term.
There have been talks between the US and Russia as well as the US and Ukraine, aiming to secure at least a limited ceasefire with talks continuing during Tuesday’s European session.
ING commented; “Indications that some agreement is building around a full ceasefire would support European sentiment and the euro. Barring that, fading optimism on a quick truce can make generally overvalued (in the near term) European currencies trade on the soft side.”
The German IFO business confidence index improved to 86.7 for March from a revised 85.3 the previous month and very close to consensus forecasts of 86.8.
There was a limited improvement in the current conditions index to 85.7 from 85.0 previously with a sharper increase in the expectations component to 87.7 from 85.6.
According to the IFO; “In the manufacturing sector, the index rose significantly. In particular, skeptical voices regarding expectations have noticeably diminished. Companies also assessed their current situation more positively. However, order backlogs declined slightly.”
ING commented; “There is no doubt that the German economy will soon experience a cyclical upswing. How long this upswing will last and whether it could become a structural recovery will now highly depend on whether or not the official coalition talks lead to real structural reforms.”
PMI business confidence data was mixed with a net improvement in manufacturing.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented; “Just in time with the beginning of spring we may see the first green shoots in manufacturing.”
According to Scotiabank, the; “The Eurozone economy remains resilient in the face of tariff risks, it would seem.”
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TAGS: Pound Euro Forecasts
