The Pound-Euro could edge higher if Eurozone sentiment improves, although weak German jobs data may limit the single currency’s upside.
The Pound to Euro (GBP/EUR) exchange rate was rangebound on Thursday as markets digested the minutes from the European Central Bank’s (ECB) latest policy meeting.
At the time of writing, the GBP/EUR exchange rate was trading at around €1.1664. Unchanged from the start of Thursday’s session.
DAILY RECAP:
The Euro (EUR) held steady on Thursday as the minutes from the European Central Bank’s latest policy meeting offered few surprises for EUR investors.
The minutes showed that ECB policymakers considered another interest-rate increase likely to be necessary to return inflation sustainably to the bank’s 2% target. Members noted that, unless there was a significant improvement in the inflation outlook, further tightening would be warranted.
This broadly aligned with expectations already priced into financial markets, with investors widely expecting a 25-basis-point rate hike at the ECB’s September meeting.
The Pound (GBP) was subdued on Thursday as a lull in UK economic data left Sterling without a clear domestic catalyst.
The quiet domestic backdrop comes after a particularly busy period for UK data, including July’s inflation figures, which showed CPI accelerating to 2.9%, and labour market data pointing to a gradual cooling in employment conditions.
The mixed signals have left investors divided over the outlook for Bank of England (BoE) monetary policy, with traders increasingly sceptical that the bank will raise rates before the end of 2026.
Near-Term GBP/EUR Forecast: Improving Eurozone Economic Sentiment to Boost the Euro?
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate at the end of this week’s session looks to be the publication of the Eurozone’s latest economic sentiment index.
Friday’s data could lift the single currency if the index reports that morale continued to improve through August.
However, the Euro’s upside potential could prove limited as Germany’s latest jobs data is expected to reinforce concerns about the Eurozone’s largest economy and the resilience of its labour market.
Meanwhile, in the absence of any notable UK economic indicator, any movement in the Pound is likely to be dictated by wider currency trends, with a cautious mood potentially sapping Sterling sentiment.
Our currency coverage draws on live market data, official economic releases and published bank research.
