The Pound-Euro rate could remain supported if UK jobs and inflation data reinforce November BoE hike bets, while firmer Eurozone PMIs may offer the Euro some relief.
The Pound to Euro (GBP/EUR) exchange rate accelerated to a fresh 16-month high last week, supported by surprisingly resilient UK economic growth.
At the time of writing, the GBP/EUR exchange rate was trading at around €1.1849. Up roughly 0.3% from the start of last week’s session.
Pound to Euro (GBP/EUR): 1.186015 (+0.20%)
Euro to Dollar (EUR/USD): 1.12394 (+0.23%)
DAILY RECAP:
The Pound (GBP) was a little erratic in the first half of last week as market participants digested competing economic signals.
Initial tailwinds arrived from the International Monetary Fund (IMF), which upgraded its 2026 growth outlook for the UK economy from 1.0% to 1.3%.
However, that optimism was quickly checked by remarks from Bank of England (BoE) Chief Economist Huw Pill, who dampened currency sentiment by questioning aggressive market bets on four quarter-point interest rate rises over the next twelve months.
Sterling then accelerated in the second half of the week courtesy of a surprise uptick in monthly GDP.
August’s unexpected expansion not only reinforced expectations that the Bank of England (BoE) will lift borrowing costs in November, and was also seen as offering more fiscal headroom for Chancellor John Healey in his upcoming Autumn Budget.
The Euro (EUR) opened last week’s session on the defensive, as persistent concerns over France’s mounting debt crisis continued to weigh on EUR sentiment.
The uncertainty surrounding the country’s proposed budget and the approaching 2027 presidential election drove French borrowing costs higher, while the premium investors demanded to hold French government bonds over German Bunds remained elevated.
The Euro then found a much-needed reprieve in the second half of the week, drawing strength from its negative correlation with the US Dollar (USD) as the latter tumbled.
Although fears that France’s fiscal woes could morph into a wider Eurozone debt crisis ultimately capped the Euro’s upside potential.
Near-Term GBP/EUR Forecast: Markets Brace for Deluge of UK Data
Turning to this week, movement in the Pound to Euro exchange rate is likely to be dominated by several top-tier UK macroeconomic releases.
Particular highlights are likely to be the UK’s latest labour market report and consumer price index, the final major economic barometers due before the BoE convenes for its November policy gathering.
Any indications of cooling inflation or labour market slack that cast doubt on the case for an imminent rate increase could see Sterling quickly surrender its recent gains.
Meanwhile, in addition to ongoing French debt concerns, the Euro will also be influenced by the Eurozone’s latest PMI figures, with the Euro potentially finding further relief if the bloc’s private sector continued to expand at a healthy pace this month.
Our currency coverage draws on live market data, official economic releases and published bank research.
