Pound to Euro Climbs to Best Rate in 5 Weeks Amid EU-US Trade Friction

May 13, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Climbs to Best Rate in 5 Weeks Amid EU-US Trade Friction

The Pound-to-Euro exchange rate (GBP/EUR) edged higher on Tuesday, amid fresh concerns over transatlantic trade tensions.

At the time of writing, GBP/EUR was holding steady near €1.1893. Up roughly 0.2% from Tuesday’s opening levels.

The Euro also came under some pressure on Tuesday, after comments from US President Donald Trump sparked concern over potential US-EU trade friction.

After a de-escalation of the US-China trade Trump turned his focus to the EU, labelling the bloc as ‘nastier than China’ in remarks on Monday.

Trump went on to claim that ‘Oh, they'll come down a lot. You watch. We have all the cards. They treat us very unfairly.’

This sparked fresh concerns over transatlantic trade tensions, with EUR investors fearing that Trump’s distain towards the EU could make it difficult to negotiate a deal to lift the remaining tariffs.

Despite these fears, the single currency found some support from a sharp rebound in German investor confidence.


Germany’s ZEW economic sentiment index jumped from –14 to 25.2 in May, far exceeding expectations and suggesting improving optimism within the Eurozone’s largest economy.

At the same time, the Pound’s upside potential was limited Tuesday, in response to soft UK jobs data.

Figures from the Office for National Statistics (ONS) showed that unemployment rose to 4.5% in March, the highest level recorded since summer 2021.

Wage growth (excluding bonuses) also softened, slipping from 5.9% to 5.6% and undershooting forecasts for a drop to 5.7%.

With signs the job market is losing steam, investors grew increasingly concerned about the UK’s economic outlook, especially as additional pressures loom, such as rising employer costs and external trade threats.

Adding to the Pound’s woes, speculation resurfaced that the Bank of England (BoE) could be forced into further rate reductions to support the slowing economy, despite persistent inflation risks.

Looking to the days ahead, attention is likely to shift towards the UK’s upcoming GDP figures due on Thursday.


Preliminary estimates for Q1 are expected to indicate a stronger pace of growth, with analysts predicting a 0.6% rise.

A solid reading could lift sentiment towards the Pound and help it gain ground in the latter part of the week.

Meanwhile, the Euro could face fresh pressure if Germany’s final inflation data for April confirms that price pressures have eased further, adding to speculation that the European Central Bank (ECB) could accelerate policy loosening.

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TAGS: Pound Euro Forecasts