GBP/EUR Forecast: Pound Up vs Euro amid China-US Trade De-Escalation

May 12, 2025 - Written by David Woodsmith

STORY LINK GBP/EUR Forecast: Pound Up vs Euro amid China-US Trade De-Escalation

The Pound Euro (GBP/EUR) exchange rate drifted higher on Monday following news that the US and China have reached a 90-day trade agreement, bolstering market sentiment.

At the time of writing, the GBP/EUR was trading at around €1.1746, up roughly 0.2% from Monday’s opening levels.

The Euro (EUR) faced a sharp sell-off at the start of the week, tumbling over 1% against several major currencies as markets reacted to a breakthrough in US–China trade negotiations.

Talks held in Geneva over the weekend resulted in both Washington and Beijing agreeing to a 90-day easing of trade tensions.

By mutually agreeing to slash tariffs by 115% each, the US and China boosted confidence in global trade and triggered a wave of optimism within markets.

The resulting surge in risk appetite saw the Euro, often seen as a safer bet and typically moving inversely to the ‘Greenback’, suffer steep losses against most major currencies.

The Pound tumbled out of the gate this week, weakening broadly as an upbeat global sentiment followed the announcement of a trade pact between the US and China.


Despite Sterling’s position as an increasingly risk-sensitive currency, GBP exchange rates weakened against its acutely risk-sensitive peers, and the US Dollar.

Markets were also unfazed by some cautionary comments from Bank of England (BoE) policymaker Clare Lombardelli, who urged a measured approach to future interest rate cuts.

However, this did little to reverse the Pound’s downward trend on Monday.

The GBP/EUR exchange rate could face fresh headwinds on Tuesday, with key economic indicators due from both the UK and Eurozone.

For the UK, markets will be closely watching the UK’s latest unemployment data for March.

A rise in unemployment, as analysts expect, could weigh further on the Pound.

Meanwhile, in the Eurozone, investor attention will turn to Germany’s ZEW economic sentiment survey.


Expectations point to an improvement in the outlook for May.

As such, a result in line with or above forecasts may offer the Euro a leg up against its peers as the week continues.

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TAGS: Pound Euro Forecasts