The Pound-Euro rate could come under pressure if UK GDP contracts, although weak Eurozone output and French debt concerns may keep the Euro vulnerable.
The Pound Euro (GBP/EUR) exchange rate rose to a fresh 16-month high on Wednesday following comments from European Central Bank (ECB) President Christine Lagarde.
At the time of writing, GBP/EUR was trading at €1.1851, its highest level since June 2025.
Pound to Euro (GBP/EUR): 1.18528 (+0.15%)
Euro to Dollar (EUR/USD): 1.119385 (-0.07%)
DAILY RECAP:
The Euro (EUR) touched fresh multi-month lows on Wednesday, as EUR’s negative correlation with the US Dollar (USD) and comments from ECB President Christine Lagarde impacted the currency.
The ECB chief said that the bank isn’t yet seeing any second-round inflation effects, although it remains alert to the signs. The mildly dovish comments put some pressure on the Euro.
Lagarde also touched on the French debt crisis, indicating that there would be no intervention for the time being as the main solution is French fiscal policy.
French debt fears have weighed heavily on the single currency in recent weeks, and remain a key point of concern for EUR investors. While French bond yields have eased this week as the country’s parliament debates the government’s 2027 budget, anxiety continues to suppress EUR demand.
The Euro did attempt to recover, supported by a dip in the US Dollar. However, USD rose again later in the session, pushing EUR to fresh lows.
The Pound (GBP) struck a fresh 16-month high against the beleaguered Euro on Thursday before pulling back as some investors moved to lock in profits. Sterling subsequently resumed its climb, hitting another 16-month high.
Sterling’s gains may have been tempered by comments from Bank of England (BoE) Chief Economist Huw Pill, who was speaking on the sidelines of the International Monetary Fund’s (IMF) annual meeting.
While Pill said he expects the bank to raise interest rates over the coming months, he also pushed back against market pricing for four rate hikes by September 2027.
Nevertheless, GBP was able to resume its climb against EUR as the single currency faced fresh pressure.
Near-Term GBP/EUR Forecast: UK GDP Figures to Dent the Pound?
Looking forward, the UK’s latest monthly GDP figures are the focus for GBP investors on Thursday. Markets expect the British economy to have contracted 0.1% in August, which could apply pressure to the Pound.
There’s an outside chance the GDP figures could exceed expectations, as they have done in recent months. If so, Sterling could strengthen.
As for the Euro, the Eurozone’s latest industrial production figures could impact EUR. Output is forecast to have stalled in August, which may mute the common currency.
Our currency coverage draws on live market data, official economic releases and published bank research.
