GBP/EUR Forecast: Pound Rangebound vs Euro despite Disappointing German Release

May 20, 2025 - Written by David Woodsmith

STORY LINK GBP/EUR Forecast: Pound Rangebound vs Euro despite Disappointing German Release

The Pound-to-Euro (GBP/EUR) exchange rate traded in a narrow range on Tuesday as Germany published its latest producer price index (PPI).

At the time of writing, the GBP/EUR was trading at around €1.1885, virtually unchanged from Tuesday’s opening levels.

The Euro (EUR) advanced against most major currencies on Tuesday, brushing off disappointing data from Germany.

Figures from the Eurozone’s largest economy showed that producer prices fell by 0.9% in April, marking a steeper drop than the -0.6% forecast and the sharpest monthly decline since October 2024.

It also signalled the second month in a row of falling PPI, highlighting ongoing deflationary pressures in the German economy.

Despite the weak reading, the Euro found support as the US Dollar (USD) extended its decline.
The ‘Greenback’ remained under pressure after Moody’s downgraded the United States’ sovereign credit rating from AAA
to AA1 at the start of the week, weakening USD sentiment.


Given the typically negative correlation between the two currencies, the Euro was able to capitalise and push higher.

The Pound (GBP) found support on Tuesday, gaining ground against most major currencies, although its performance
was more subdued against the Euro (EUR).

Sterling was buoyed by the announcement of a new UK–EU trade agreement aimed at easing friction on cross-border goods, particularly in the agriculture and food sectors.

The deal could deliver a £9 billion boost to the UK economy, lifting market sentiment and helping to drive the Pound higher.

Adding to the momentum were comments from Bank of England (BoE) Chief Economist Huw Pill, who warned that the current pace of interest rate cut expectations may be too aggressive.

The Pound Euro (GBP/EUR) exchange rate could face notable movement on Wednesday as investors react to the UK’s latest inflation figures.

Markets are bracing for an uptick in both headline and core consumer price index (CPI) readings for April, with core inflation expected to rise from 3.4% to 3.6%, and headline inflation forecast to leap up from 2.6% to 3.3%.


If the data comes in as expected, it could dampen speculation over interest rate cuts from the Bank of England, offering the Pound a potential lift.

Meanwhile, the Euro may struggle to find direction in the absence of any fresh economic data from the Eurozone.

In this vacuum, EUR movement is likely to be shaped by broader market sentiment.

If the US Dollar continues to falter, the Euro could find some indirect support due to its negative correlation with the ‘Greenback’, potentially helping to buoy the common currency during Wednesday’s European session.

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TAGS: Pound Euro Forecasts