The Pound to Euro (GBP/EUR) exchange rate was subdued on Thursday as weaker-than-expected UK GDP figures reinforced expectations for further Bank of England rate cuts.
Pound to Euro (GBP/EUR): 1.14799 (+0.07%)
Pound to Dollar (GBP/USD): 1.36244 (+0.01%)
Euro to Dollar (EUR/USD): 1.1868 (-0.06%)
DAILY RECAP:
The Pound struggled to gain traction after the UK’s preliminary GDP estimate for the fourth quarter of 2025 fell short of expectations.
Data from the Office for National Statistics showed the UK economy expanded by 0.1% in Q4, matching the previous quarter’s pace but missing forecasts for a 0.2% rise.
The softer reading was attributed largely to stagnation in the services sector, which lost momentum at the end of the year.
On an annual basis, the UK economy is estimated to have grown by 1.3% in 2025, outperforming several other major European economies. However, the quarterly miss limited Sterling’s upside.
Investors interpreted the data as reinforcing the likelihood that the Bank of England will proceed with another interest rate cut in the near term, capping demand for GBP.
Meanwhile, the Euro (EUR) traded in a narrow range.
EUR investors remained cautious ahead of renewed peace talks involving Ukraine, Russia and the United States. While diplomatic progress would be welcomed, previous negotiations have faltered over territorial disputes, leaving markets wary of pricing in optimism too quickly.
Near-Term GBP/EUR Forecast: Eurozone GDP in Focus
Attention now turns to the Eurozone’s latest GDP release.
The bloc’s second estimate is expected to confirm quarterly growth of 0.3% in the final quarter of 2025. Confirmation of steady expansion could lend the Euro modest support.
Markets will also monitor comments from European Central Bank Vice-President Luis de Guindos. Any hawkish signals on inflation or policy could underpin EUR.
For the Pound, the absence of further UK data leaves Sterling vulnerable to broader market trends and shifting interest rate expectations.
