Pound-Euro could edge higher if softer ECB rhetoric weighs on the single currency, although stronger German data may continue to underpin EUR.
The Pound Euro (GBP/EUR) exchange rate initially firmed on Tuesday, before quickly retreating as German data lent the single currency support.
At the time of writing, GBP/EUR was trading at €1.1688, having pulled back from a one-week high of €1.1696
DAILY RECAP:
The Pound (GBP) ticked higher at the start of Tuesday’s European session, without a clear catalyst for the movement.
The increasingly risk-sensitive currency may have been boosted by a slight improvement in market risk appetite.
However, a lack of economic data saw Sterling struggle to sustain its upside.
Meanwhile, the Euro (EUR) managed to recoup its initial losses against the Pound thanks to stronger-than-expected German economic data.
Germany’s latest IFO business climate index rose more than expected in August, improving for the fourth consecutive month and hitting its highest level in a year.
Signs of life in the Eurozone’s largest economy cheered EUR investors, helping the Euro gain ground.
This data also built on German GDP data from earlier in the session. The finalised GDP figures showed the German economy cooled less than expected in the second quarter of 2026, printing at 0.3% rather than 0.2%.
Near-Term GBP/EUR Forecast: CBI Data to Support Sterling?
Looking forward, Wednesday brings the latest Confederation of British Industry (CBI) distributive trades survey. A slight improvement in the retail sales balance could offer GBP modest support.
Meanwhile, EUR investors may look to a speech from European Central Bank (ECB) policymaker Piero Cipollone for fresh impetus. As one of the more dovish members of the Governing Council, his comments could put some pressure on the single currency.
Movement in the US Dollar (USD) could also influence the Euro, due to EUR’s strong negative correlation with USD. If the ‘Greenback’ firms, the common currency could struggle.
Our currency coverage draws on live market data, official economic releases and published bank research.
