Pound to Euro Rate Holds Near €1.15 on Strong UK PMI

– Written by


David Woodsmith

STORY LINK Pound to Euro Rate Holds Near €1.15 on Strong UK PMI

The Pound to Euro exchange rate (GBP/EUR) opened the week on a firmer footing, drawing modest support from stronger-than-expected UK manufacturing data.

At the time of writing, GBP/EUR was trading close to €1.1549, edging higher from Monday’s opening levels and holding near recent highs.

The Pound (GBP) attracted support after the release of the UK’s latest manufacturing PMI figures. Finalised January data showed the index was revised up from 51.6 to 51.8, marking the strongest expansion in factory activity since August 2024.

Momentum was helped by the first increase in new export orders in four years, alongside a noticeable improvement in business confidence at the start of 2026.

Commenting on the release, S&P Global Market Intelligence director Rob Dobson said UK manufacturing had shown “encouraging resilience” despite rising geopolitical risks.

However, Sterling’s gains were capped by evidence that job losses across the factory sector continued, underlining persistent structural challenges facing UK manufacturers.

The Euro (EUR) struggled to gain traction during Monday’s session as investors weighed fresh data from Germany.

Figures from Destatis showed German retail sales rose by 0.1% in December, improving from a 0.5% decline previously and beating expectations for another contraction. Even so, the data did little to ease concerns over weak consumer demand in the Eurozone’s largest economy.

Further limiting EUR upside, the Eurozone’s manufacturing PMI confirmed the bloc’s factory sector contracted for a fifth consecutive month in January, reinforcing the view that growth momentum remains fragile.

GBP/EUR Forecast: Inflation Data to Test the Euro

Looking ahead, attention turns to the Eurozone’s latest inflation figures due on Wednesday.

January’s preliminary CPI reading is forecast to show inflation easing from 1.9% to 1.7%, potentially the lowest level in almost five years. Such an outcome would leave inflation well below the European Central Bank’s 2% target and could weigh on the Euro if it strengthens expectations for looser monetary policy.

On the UK side, the Pound may look to the final services PMI for January. Confirmation that activity in the UK’s dominant services sector accelerated to a 21-month high could provide further near-term support for Sterling.

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