EUR Slips As Inflation Misses Expectations

The Pound Euro (GBP/EUR) exchange rate ticked higher on Tuesday, as markets digested the latest UK GDP figures and Eurozone inflation data.

DAILY RECAP:

The Pound (GBP) managed to find some support on Tuesday, despite the UK’s final GDP figures for the fourth quarter showing that the British economy grew just 0.1% quarter-on-quarter at the end of 2025.

Sterling may have attracted bids after the annual GDP growth rate was revised slightly higher, from 1.3% to 1.4%.

In addition, a rise in UK grocery inflation in March may have helped to reinforce Bank of England (BoE) interest rate hike bets. Food inflation rose to 4.3% in the four weeks to 22 March.

Meanwhile, the Euro (EUR) struggled to attract support on Tuesday, despite a jump in Eurozone inflation in March.

The bloc’s preliminary consumer price index showed headline inflation leapt from 1.9% to 2.5%, pushing above the European Central Bank’s (ECB) 2% target.

However, the rise wasn’t as sharp as markets expected, and core inflation eased in March, from 2.4% to 2.3%.

With the data missing forecasts, some investors slightly scaled back their most hawkish ECB rate hike bets, leading to modest losses in EUR.

GBP/EUR Forecast: Final PMIs to Influence the Pairing?

Looking forward, Wednesday brings the final manufacturing PMI results for both the Eurozone and the UK. Confirmation that Eurozone activity improved while British activity slowed could put some pressure on GBP/EUR, although movement may be limited unless the surveys deviate from the preliminary results.

The Eurozone unemployment rate is also due to be published on Wednesday, although the impact on EUR may once again be negligible.

Meanwhile, the crisis in the Middle East could infuse markets with volatility, potentially leading to some fluctuations in the Pound to Euro exchange rate.