The Pound-Euro rate could stay under pressure if UK retail sentiment weakens, while firmer German confidence and ECB commentary may support the Euro.
The Pound Euro (GBP/EUR) exchange rate was subdued on Wednesday, as markets digested the latest PMI results from the Eurozone and the UK.
At the time of writing, GBP/EUR was trading at €1.1642, marginally down on the day.
Pound to Euro (GBP/EUR): 1.163042 (-0.22%)
Euro to Dollar (EUR/USD): 1.138947 (-0.51%)
DAILY RECAP:
The Euro (EUR) struggled to push higher on Wednesday, despite positive PMI results from the Eurozone.
The latest manufacturing index printed marginally above forecasts to show that factory activity held steady at a healthy 52.7 in September. Meanwhile, the services PMI comfortably beat forecasts, rising from 51.6 to 53, rather than easing to 51.5.
However, the data failed to lift EUR meaningfully, as the single currency faced pressure from its strong negative correlation with the rising US Dollar (USD).
Meanwhile, the Pound (GBP) faced some pressure following the UK’s own PMI surveys.
While the UK’s manufacturing PMI pointed to a surprise rise in activity, the more important services PMI revealed a deeper-than-forecast slowdown.
However, GBP was cushioned by news that the Organisation for Economic Co-operation and Development (OECD) had upgraded its UK growth forecast for 2026, with government support measures expected to help buoy domestic growth.
This limited Sterling’s downside.
Near-Term GBP/EUR Forecast: Central Bank Speeches to Impact the Pairing?
Looking forward, Thursday’s session kicks off with Germany’s latest IFO business climate indicator. A marginal improvement in September could lend EUR modest support, although it’s unlikely to drive a meaningful upside.
Additionally, we’ll hear from two European Central Bank (ECB) officials – Isabel Schnabel and Chief Economist Philip Lane. Could mixed remarks about monetary policy see EUR waver?
Meanwhile, the latest distributive trades survey from the Confederation of British Industry (CBI) could influence Sterling. Another gloomy reading for September could mute the Pound.
GBP investors will also look to two speeches from Bank of England (BoE) policymakers for fresh impetus. Markets may brush off remarks from known dove Swati Dhingra and instead focus on comments from Deputy Governor Sarah Breeden. If she maintains a cautious stance, the Pound may soften.
Our currency coverage draws on live market data, official economic releases and published bank research.
