Pound Sterling to Euro Forecast: EUR Wobbles as USD Shifts

– Written by


James Fuller

STORY LINK Pound Sterling to Euro Forecast: EUR Wobbles as USD Shifts

The Pound to Euro exchange rate (GBP/EUR) wavered on Wednesday as a lack of fresh UK and Eurozone data left the pairing drifting without a clear directional driver.

At the time of writing, GBP/EUR was trading at €1.1440, virtually unchanged from its opening levels.

The Euro (EUR) opened Wednesday on a firmer footing, benefiting from its strong inverse correlation with a softening US Dollar (USD). As the ‘Greenback’ came under pressure ahead of an anticipated Federal Reserve rate cut, EUR found some early support.

However, this momentum faded quickly. Ongoing unease surrounding the Russia–Ukraine conflict — alongside signs of strain in EU–US relations — continued to cloud the single currency’s broader outlook.

A mild recovery in USD later in the session further pared back the Euro’s gains, leaving EUR directionless by the afternoon.

The Pound (GBP) was similarly subdued on Wednesday, with a quiet UK data docket offering little impetus for Sterling.

Instead, traders continued analysing comments made a day earlier during the Bank of England’s (BoE) Treasury Committee testimony. The session highlighted sharp divisions within the Monetary Policy Committee, with officials offering contrasting views on the inflation outlook — mirroring the bank’s narrow 5–4 split at its most recent decision.

Policymakers also suggested the UK’s recent autumn budget could trim inflation by up to 0.5 percentage points, adding another layer for markets to digest.

As these mixed signals filtered through, the prospect of easing inflation and uncertainty over the BoE’s policy trajectory left the Pound lacking momentum.

GBP/EUR Forecast: Geopolitics to Steer Euro Sentiment?

Looking ahead, Thursday offers little in terms of UK or Eurozone economic data, suggesting the GBP/EUR exchange rate will continue to be shaped by wider market sentiment.

For the Euro, geopolitical factors may prove decisive. Recent optimism surrounding a draft US-led Russia–Ukraine peace proposal has faded, with Moscow rejecting crucial elements and demanding territorial concessions Kyiv has repeatedly ruled out.

Tensions between Washington and Brussels have also sparked concern that the US may distance itself from the EU at a time when the bloc faces intensifying pressure from Russia. Any headlines reinforcing this narrative could weigh heavily on the Euro.

For the Pound, domestic political developments and overall market risk appetite may set the tone. A brighter mood could lend support to the increasingly risk-sensitive Sterling, though lingering concerns over the UK’s political stability and sluggish growth backdrop may continue to cap upside potential.

Together, heightened geopolitical uncertainty and subdued data flow create an uneasy trading environment — leaving both currencies vulnerable to sudden shifts in sentiment.

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TAGS: Pound Euro Forecasts