June 17, 2025 – Written by Frank Davies
STORY LINK Pound Sterling to Slide Against Euro Ahead of UK Inflation
The Pound-to-Euro exchange rate (GBP/EUR) treaded water on Tuesday despite the release of Germany’s latest ZEW economic sentiment index.
At the time of writing, the GBP/EUR was trading at around €1.1731, virtually unchanged from Tuesday’s opening levels.
The Euro (EUR) held firm against most of its peers on Tuesday, shrugging off the prevailing risk-on sentiment thanks to upbeat data out of Germany.
The latest ZEW economic sentiment index surged to 47.5 in June, significantly exceeding forecasts of 35 and rising sharply from May’s reading of 25.2.
This marked the highest level in three months, indicating growing optimism around Germany’s economic outlook.
The stronger-than-expected result lent modest support to the single currency, helping EUR exchange rates stay afloat despite a broader tilt toward risk appetite.
The Pound (GBP) traded in a narrow range on Tuesday, with movement largely muted ahead of key UK inflation data due mid-week.
Sterling edged lower against risk-sensitive currencies such as the Australian Dollar (AUD) and the New Zealand Dollar (NZD), as upbeat market sentiment persisted throughout the session.
However, the Pound held steady against most of its other peers, as investors refrained from making bold moves before the release of the UK’s latest consumer price index (CPI) figures on Wednesday.
Looking ahead, movement in the Pound Euro (GBP/EUR) exchange rate on Wednesday will likely be driven by the UK’s latest inflation figures.
Headline inflation is expected to ease slightly from 3.5% to 3.4% in May, while core inflation is forecast to dip from 3.8% to 3.6%.
If confirmed, the cooling price pressures may fuel further speculation that the Bank of England (BoE) is edging closer to cutting interest rates, potentially weighing on Sterling.
That said, with both measures of inflation still sitting well above the BoE’s 2% target, any downside in GBP may be limited.
Meanwhile, in the Eurozone, attention will turn to the finalised CPI figures for May.
If the data confirms that both headline and core inflation slowed as expected, the Euro may struggle to attract support during Wednesday’s session.
International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Euro Forecasts
