Pound-to-Euro Flat Near 1.14 | Currency News UK

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David Woodsmith

STORY LINK Pound-to-Euro Flat Near 1.14

The Pound to Euro (GBP/EUR) exchange rate moved within a limited range on Thursday as investors weighed expectations for imminent interest rate reductions in the UK.

At the time of writing, GBP/EUR hovered near €1.1439, little changed compared with levels seen at the opening of the European session.

The Pound struggled to find traction as financial markets grew increasingly convinced that the Bank of England will begin lowering borrowing costs in the near term.

A 25-basis-point rate reduction at the central bank’s March meeting is now widely anticipated. Moreover, following weaker labour market data and a slowdown in inflation earlier in the week, some analysts have started to speculate that policymakers could move more quickly than previously expected, potentially delivering additional easing shortly afterwards.

Sterling sentiment was also dampened by ongoing domestic political uncertainty. Concerns persist that an unfavourable outcome for Labour in the upcoming Gorton and Denton by-election could intensify pressure on Prime Minister Keir Starmer, adding another layer of caution for GBP investors.

The Euro lacked a clear trend due to a scarcity of notable Eurozone economic releases.

With limited domestic drivers, movement in the single currency largely reflected broader market dynamics. Strength in the US Dollar indirectly weighed on the Euro, given the typically inverse relationship between the two major currencies.

Short-Term GBP/EUR Forecast: PMI Surveys and Retail Sales in Focus

Attention will turn to the release of the latest preliminary PMI figures from both the UK and the Eurozone, which are expected to drive volatility in the Pound to Euro exchange rate at the end of the week.

Although business activity is forecast to slow across both regions, the UK economy is still projected to outperform the Eurozone. If confirmed, this divergence could place some pressure on the Euro following Friday’s data releases.

At the same time, the publication of the UK’s retail sales figures may influence Sterling’s trajectory. Any indication that consumer spending weakened at the start of the year could prevent the Pound from staging a meaningful recovery.

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TAGS: Pound Euro Forecasts