Pound to Euro Rebounds | Currency News UK

– Written by


David Woodsmith

STORY LINK Pound to Euro Rebounds

The Pound Euro (GBP/EUR) exchange rate regained ground on Wednesday as markets digested the UK’s latest inflation figures, reversing part of the prior session’s decline.

At the time of writing, GBP/EUR was trading at €1.1465, up roughly 0.2% on the day as Sterling drew support from the consumer price index data.

The Pound steadied and pushed higher after the UK’s latest inflation figures offered a mixed picture for policymakers and investors alike.

January’s consumer price index showed headline inflation slowing from 3.4% to 3%, while core inflation slipped from 3.2% to 3.1%, broadly matching market expectations.

However, the data was not quite as soft as the Bank of England had projected. The central bank had pencilled in a sharper drop in headline inflation to 2.9%, suggesting price pressures are proving marginally more persistent than anticipated.

There were also signs of stickiness beneath the surface. Core services inflation – closely monitored by policymakers – ticked up from 4% to 4.3% in January, according to ING calculations.

In the wake of the release, many analysts continued to pencil in a March interest rate cut. That said, some argued the Bank of England could delay action until April to gain greater confidence that disinflation remains on track.

The slightly firmer inflation backdrop, combined with lingering uncertainty over the timing of rate cuts, allowed Sterling to claw back some recent losses.

The Euro found itself on the back foot as a sparse Eurozone calendar left the single currency exposed to shifting geopolitical sentiment.

With no major economic releases to provide direction, investors instead tracked developments in ongoing Russia-Ukraine peace talks. Reports suggested the US was urging Kyiv to move closer to a deal, even as Moscow maintained a firm line on territorial demands.

The prospect of a fragile agreement appeared to unnerve EUR traders, who remain sensitive to headlines that could reshape the region’s security and economic outlook.

GBP/EUR Forecast: Consumer Confidence and Geopolitics in Focus

Looking ahead, the UK’s economic calendar lightens, potentially leaving the Pound without a clear domestic catalyst.

Attention may turn to the Confederation of British Industry’s latest industrial trends survey. If factory orders remain deep in negative territory, the data could exert mild downward pressure on Sterling.

For the Euro, focus shifts to the Eurozone’s consumer confidence index. A modest improvement in sentiment could lend the single currency some support.

Beyond economic data, geopolitical developments remain a key wildcard. Clear signs of diplomatic progress may underpin the Euro, while renewed friction or pessimism could weigh on the common currency.

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TAGS: Pound Euro Forecasts