GBP/EUR Forecast: Pound Muted vs Euro following Mixed Eurozone Data

May 29, 2025 - Written by Ben Hughes

STORY LINK GBP/EUR Forecast: Pound Muted vs Euro following Mixed Eurozone Data

The Pound Euro (GBP/EUR) exchange rate wavered in a narrow range on Wednesday following some mixed Eurozone data.

At the time of writing, GBP/EUR traded at €1.1911, with the pairing having fluctuated in a narrow range since the session began.

The Pound (GBP) drifted sideways on Wednesday, with a quiet UK economic calendar offering little incentive for movement. With no major data releases scheduled this week, the Pound has struggled to find a clear narrative.

In the absence of fresh domestic indicators, markets continued to digest the International Monetary Fund’s (IMF) latest report on the UK economy, which was published on Tuesday.

While the IMF offered a slight upgrade to its 2025 growth forecast from 1.1% to 1.2%, it also flagged broader global risks and called on Chancellor Rachel Reeves to reconsider the UK’s current fiscal framework. The organisation warned that without changes, the government may face tough choices on spending if the Chancellor’s tight fiscal headroom is wiped out.

The Euro (EUR) struggled to gain traction on Wednesday as investors digested a mixed set of economic figures from across the Eurozone.

Germany’s latest labour market data showed the unemployment rate steady at 6.3% in May. However, the number of people out of work climbed by 34,000 – more than three times the forecasted rise of 10,000 – marking the sharpest monthly increase since July 2022 and raising fresh concerns about Europe’s largest economy.


Balancing this somewhat was a stronger-than-expected reading from the European Central Bank’s (ECB) consumer inflation expectations survey. Inflation expectations rose to 3.1% in April, up from 2.9% and slightly above market forecasts, offering a glimmer of support to the single currency.

As expectations around inflation can influence future monetary policy, the data gave markets more to consider regarding the ECB’s next moves on interest rates.

Eurozone and UK economic releases are sparse until Friday, when Germany’s latest inflation figures are due. A further slowdown in price pressures for May would likely reinforce expectations of interest rate cuts from the European Central Bank – a scenario that could weigh on the Euro.

In the meantime, risk sentiment may shape near-term movement in the absence of data. The Pound’s sensitivity to shifts in market mood could see it falter if investors adopt a more cautious tone, favouring the traditionally safer Euro.

Traders will also be keeping an eye on developments from across the Atlantic. Fluctuations in the US Dollar – with which the Euro is inversely correlated – and any fresh policy signals from Donald Trump, particularly around trade or tariffs, could ripple through the currency market and influence the GBP/EUR pairing.

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TAGS: Pound Euro Forecasts