The Pound Euro (GBP/EUR) exchange rate wavered on Thursday as investors digested the Eurozone’s latest economic sentiment index.
Pound to Euro (GBP/EUR): 1.15473 (+0.04%)
Pound to Dollar (GBP/USD): 1.37938 (-0.23%)
Euro to Dollar (EUR/USD): 1.19454 (-0.28%)
DAILY RECAP:
The Pound (GBP) continued to lack a clear direction amid an uncertain week for the UK currency, with very little British economic data to drive movement and a lack of meaningful domestic events or headlines.
This saw GBP/EUR remain rangebound on Thursday, as Sterling was unable to find a trajectory.
Meanwhile, the Euro (EUR) also found itself muted on Thursday as EUR investors digested the Eurozone’s latest economic sentiment index.
On one hand, the indicator exceeded expectations in January, rising from 97.2 to hit a three-year high of 99.4. On the other, consumer inflation expectations fell more than forecast, easing from 26.7 to 24.1.
While markets don’t expect another interest rate cut from the European Central Bank (ECB) any time soon, this dip in inflation expectations offset the upside potential from the economic sentiment index.
The data comes after EUR faced losses on Wednesday following comments from ECB policymaker Martin Kocher. Kocher opened the door to further rate cuts if the Euro continues to grow stronger against the US Dollar (USD), with EUR/USD recently hitting its highest level in four and a half years.
Near-Term GBP/EUR Forecast: Eurozone GDP in the Spotlight
Looking forward, the Eurozone’s preliminary GDP growth rate for the fourth quarter of 2025 is the focus on Friday.
Analysts expect GDP to have slowed slightly from 0.3% in Q3 to 0.2% in Q4. Such a result could subdue EUR exchange rates. A surprise result would likely drive steeper movement. If the data beats or misses forecasts, then the Euro could rally or slide, respectively.
The common currency could also be influenced by Germany’s preliminary inflation figures for January, with a forecast rise in inflation potentially supporting the Euro.
Meanwhile, impactful UK data remains absent through to the end of the week, meaning GBP/EUR may be primarily driven by Euro movements.
