Pound to Euro Rate Near Five-Month Best Ahead of Eurozone Inflation

– Written by


Tim Boyer

STORY LINK Pound to Euro Rate Near Five-Month Best Ahead of Eurozone Inflation

The Pound to Euro exchange rate (GBP/EUR) remained firm on Tuesday, consolidating just below the best conversion of five months as Sterling continued to draw support from recent gains, while a lack of fresh Eurozone catalysts kept the single currency on the defensive.

At the time of writing, GBP/EUR was trading at 1.1594, marginally higher on the day and holding close to Monday’s overnight peak near 1.1600, as markets paused ahead of key Eurozone inflation data and the European Central Bank’s policy decision later in the week.

The Euro struggled to regain momentum during the session, remaining weighed down by its inverse relationship with a firmer US Dollar and by investor caution ahead of upcoming macro risk events. Thin trading conditions and a quiet Eurozone data calendar left EUR rangebound, allowing the Pound to remain supported near recent highs despite limited domestic UK data flow.

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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