Pound to Euro Rate Subdued as Markets Awaited UK Spending Review

June 12, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Rate Subdued as Markets Awaited UK Spending Review

The Pound Euro (GBP/EUR) exchange rate traded mostly flat on Wednesday ahead of the UK government’s upcoming spending review.

The Pound (GBP) saw limited movement on Wednesday, with investors adopting a cautious stance ahead of the UK government’s upcoming spending review.

Attention turned to Chancellor Rachel Reeves, who is expected to outline departmental budgets for the next three years.

The review has the potential to drive significant volatility in GBP exchange rates, depending on its tone and direction.

Pro-growth announcements or increased investment in key sectors may bolster confidence in the UK economy and lift Sterling.

However, any indication of future tax increases or tighter fiscal measures could weigh on the Pound.

The Euro (EUR) advanced against several major peers on Wednesday, underpinned by lingering support from the European Central Bank’s (ECB) recent hawkish rhetoric.


After ECB President Christine Lagarde struck a cautious tone last week, other policymakers have echoed her message in recent days.

Comments from officials such as Olli Rehn, Francois Villeroy de Galhau, and Croatia’s central bank governor Boris Vucic all signalled a reluctance to commit to further rate reductions without fresh economic projections.

This unified stance helped temper expectations for additional near-term rate cuts, lending the Euro modest strength through Wednesday’s session.

Looking ahead, movement in the Pound Euro (GBP/EUR) exchange rate on Thursday will likely be driven by the UK’s latest GDP figures.

April’s reading is expected to confirm a 0.1% contraction in economic output, down from 0.2% growth in March.

If the data matches forecasts, it could amplify concerns over a stalling UK economy and fuel speculation that the Bank of England (BoE) may begin cutting interest rates sooner than previously expected, potentially putting fresh pressure on Sterling.

Meanwhile, the Eurozone’s economic calendar is quiet on Thursday, leaving the Euro likely to take its cues from a series of scheduled speeches by European Central Bank officials.


If policymakers continue to signal caution over future rate cuts, reinforcing the ECB’s hawkish tone, the single currency could extend its recent gains.

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