Pound-to-Euro Rate Nears 1.19 as UK Outperforms EU PMI Data

May 23, 2025 - Written by Tim Boyer

STORY LINK Pound-to-Euro Rate Nears 1.19 as UK Outperforms EU PMI Data

The Pound Euro (GBP/EUR) exchange rate rose on Thursday as the UK PMIs outshone the Eurozone results, although higher UK government borrowing tempered Sterling’s gains.

At the time of writing, GBP/EUR was trading at €1.1861, up roughly 0.2% from the day’s opening level.

The Pound (GBP) struggled for direction on Thursday, initially sliding after UK government borrowing figures came in far higher than expected.

The Office for National Statistics (ONS) revealed that public sector net borrowing hit £20.2bn in April – well above the £17.9bn forecast – raising concerns about the UK’s fiscal outlook and prompting talk of potential tax rises later this year.

Fresh PMI data then painted a mixed picture of the UK economy. The flash manufacturing index fell short of expectations, slipping to 45.1 rather than the predicted 46. Meanwhile, the services PMI offered a glimmer of support, edging up to 50.2 in May and just clearing the threshold for expansion.

The composite score, which combines both sectors, came in at 49.4, marginally ahead of the expected 49.3 and an improvement on April’s 48.5 reading.

Despite the underwhelming economic prints, GBP managed to firm against weaker rivals. However, its performance elsewhere was more restrained, as markets digested the subdued data.


The Euro (EUR) lost ground on Thursday after a disappointing set of PMI figures deepened concerns about the health of the Eurozone economy. Both the services sector and overall private sector activity unexpectedly contracted in May, casting fresh doubts over the Eurozone’s economic trajectory.

The latest downbeat data sparked renewed speculation that the European Central Bank (ECB) could be gearing up for further interest rate cuts in the months ahead.

With the Pound buoyed slightly by marginally stronger UK PMIs, the Euro struggled to gain traction against GBP. The contrast between the Eurozone’s deteriorating outlook and the UK’s modest service sector rebound only added to the pressure on the single currency.

Broader concerns – including the growing threat of a US-EU trade clash – added another layer of uncertainty, further weighing on EUR sentiment as the session wore on.

Looking ahead, the Euro may be influenced by Germany’s finalised GDP figures for the first quarter. Should the data confirm that the Eurozone’s largest economy returned to growth, it could offer some much-needed support to the common currency.

At the same time, the UK releases its latest retail sales numbers, with economists forecasting a slowdown in monthly growth from 0.4% in March to 0.2% in April. A softer retail performance could apply modest pressure on Sterling, though any upside surprise – as seen in March – might help the Pound gain ground.

Market attention will then turn to speeches from ECB Chief Economist Philip Lane and policymaker Isabel Schnabel. Any indication of continued policy easing could weigh on the Euro, potentially offsetting positive economic news.

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TAGS: Pound Euro Forecasts