GBP Capped By Gorton And Denton Vote

GBP/EUR year-ahead forecast: Median, range and upside/downside risks based on projections from 20+ investment banks and FX analysts.View forecasts

The Pound Euro (GBP/EUR) exchange rate wavered on Wednesday as mixed German data saw the single currency wobble.

DAILY RECAP:

The Euro (EUR) stumbled at the start of Wednesday’s session following disappointing data from Germany, the Eurozone’s largest economy.

German consumer confidence unexpectedly deteriorated heading into March, with the index dropping from -24.2 to -24.7, rather than improving to -23.1.

However, the downside was limited as Germany’s final GDP figures, released at the same time, confirmed that the economy returned to growth in the fourth quarter of 2025.

Meanwhile, Russia-Ukraine news seemed to keep the common currency confined to a relatively narrow range. Although the war continues, US-brokered negotiations are likely to continue, offering at least a slither of hope that the two sides can move towards peace.

Meanwhile, the Pound (GBP) was somewhat muted on Wednesday amid a lack of UK economic data and political uncertainty ahead of a key by-election in Greater Manchester constituency Gorton and Denton.

The by-election is seen as a key test for the ruling Labour Party and Prime Minister Keir Starmer, who has faced the threat of a leadership coup for months.

With the looming by-election potentially having notable political ramifications for the UK, and with no fresh British data to direct movement, GBP investors were unwilling to make big bets on the Pound on Wednesday.

GBP/EUR year-ahead forecast: Median, range and upside/downside risks based on projections from 20+ investment banks and FX analysts.View forecasts

Near-Term GBP/EUR Forecast: Eurozone Sentiment in Focus

Looking forward, Thursday’s session kicks off with a speech from European Central Bank (ECB) President Christine Lagarde. Any comments about monetary policy or the Eurozone economy could affect the Euro.

The main focus for EUR investors, however, is likely to be the Eurozone’s economic sentiment index for February. Economists expect a marginal improvement this month, which could provide the common currency with modest support.

As for the Pound, Sterling may be muted as voters in Gorton and Denton take to the polls for the by-election. Political jitters could subdue GBP as investors consider the possible ramifications of a vote that is seen as a crucial test for the leading Labour Party.