Pound-to-Euro Gives Back Gains after Early Data Boost

– Written by


David Woodsmith

STORY LINK Pound-to-Euro Gives Back Gains after Early Data Boost

The Pound to Euro exchange rate (GBP/EUR) edged lower on Thursday, surrendering earlier gains despite a run of stronger-than-expected UK economic data.

At the time of writing, GBP/EUR was trading around €1.1464, down roughly 0.2% on the session.

The Pound (GBP) found some initial support in early trade after a batch of mid-tier UK releases came in ahead of expectations.

First, the latest public sector borrowing figures showed government borrowing undershot forecasts in December, helped by stronger-than-anticipated tax receipts.

This was followed by a notably firmer reading from the Confederation of British Industry’s distributive trades survey.

The balance improved to -17 in January, well above expectations of -35 and a marked recovery from December’s -44 reading.

However, the upbeat data failed to translate into sustained demand for Sterling. As the session progressed, the Pound struggled to extend its gains and gradually slipped back, leaving GBP on the back foot by mid-afternoon.

Meanwhile, the Euro (EUR) traded without clear direction as a sparse Eurozone data calendar left investors short of fresh catalysts.

Attention briefly turned to the European Central Bank’s December meeting minutes, but with markets expecting the account to largely reiterate existing guidance, the release failed to generate meaningful interest in the single currency.

Geopolitical developments also offered little support. Although US President Donald Trump ruled out military action over Greenland, shelved proposed tariffs on eight European nations and spoke of “the framework of a future deal”, the reaction was muted.

Lingering uncertainty continued to temper optimism, leaving the Euro vulnerable to broader market swings.

GBP/EUR Forecast: Retail Sales and PMI Data in Focus

Looking ahead, Friday’s session begins with the release of the UK’s December retail sales figures.

A forecast 0.1% decline would mark a third consecutive monthly contraction and could see Sterling start the day under pressure.

Attention will then shift to January’s preliminary PMI readings for both the UK and the Eurozone.

While the surveys are expected to edge modestly higher, the data may struggle to drive momentum unless there is a clear surprise.

Further volatility could stem from central bank commentary.

Speeches from Bank of England policymaker Megan Greene and European Central Bank President Christine Lagarde may influence direction, with any notably hawkish signals from Greene likely to lend the Pound some support.

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TAGS: Pound Euro Forecasts