Pound Sterling Secures Five-Month Best Against Euro

– Written by


Tim Boyer

STORY LINK Pound Sterling Secures Five-Month Best Against Euro

The Pound to Euro exchange rate (GBP/EUR) held close to a five-month high on Tuesday, with the pair trading in a narrow range as a lack of fresh data left markets without a clear directional cue.

At the time of writing, GBP/EUR was trading at €1.1581, marginally below Monday’s overnight peak of €1.1591.

The Euro struggled to regain momentum during the session, remaining on the back foot after a lacklustre start to the week. Pressure on the single currency was driven in part by its inverse relationship with the US Dollar, which continued to build on its rebound from multi-year lows, limiting EUR upside.

A thin Eurozone data calendar also contributed to subdued trade. With several high-impact events looming later in the week, including inflation data and the European Central Bank’s policy decision, traders appeared reluctant to take fresh positions, keeping the Euro rangebound.

The Pound, meanwhile, also lacked clear direction amid a quiet UK data calendar. Sterling drifted without conviction but managed to hold near recent highs against the Euro after touching a five-month peak during overnight trade on Monday.

Any further gains in the Pound appeared capped by signs of easing domestic price pressures. UK grocery inflation slipped to its lowest level since April 2025, tempering enthusiasm among GBP buyers and reinforcing expectations that inflation is continuing to cool.

GBP/EUR Forecast: Eurozone Inflation and ECB in Focus

Looking ahead, attention for EUR investors will turn to Wednesday’s release of the Eurozone’s preliminary consumer price index for January.

Headline inflation is forecast to ease from 1.9% to 1.7%. Confirmation of a slowdown could revive speculation that the European Central Bank may begin laying the groundwork for additional interest rate cuts, potentially weighing on the Euro.

However, any downside may be tempered by the core CPI reading, which is expected to remain unchanged at 2.3%, signalling that underlying price pressures remain persistent.

For Sterling, the key domestic release will be the UK’s final services PMI. Should the data confirm that activity in the dominant services sector accelerated to a 21-month high in January, the Pound may find renewed support and attempt to test resistance near recent highs.

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TAGS: Pound Euro Forecasts