Pound-to-Euro Wobbles as Tariff Speculation Swirls

July 10, 2025 - Written by Frank Davies

STORY LINK Pound-to-Euro Wobbles as Tariff Speculation Swirls

The Pound to Euro exchange rate (GBP/EUR) wavered in a narrow range on Thursday as markets responded to the latest news and speculation around US tariffs.

At the time of writing, GBP/EUR was trading at €1.1590, having fluctuated in a tight range.

The Euro (EUR) was subdued on Thursday, held in check by a pickup in risk appetite that dented demand for traditionally safer assets. As investors grew more optimistic, safe-haven currencies like the Euro came under pressure.

Markets are betting that US President Donald Trump’s recent tariff threats are more tactical than genuine. Many expect him to backtrack or broker deals before any measures take effect, which has helped to cheer investors and put some pressure on the common currency.

However, EUR managed to avoid broader losses thanks to fresh optimism around a potential trade breakthrough between the EU and the US. Hints from both Washington and Brussels suggest an agreement in principle could be within reach, possibly even this week, helping temper the downside.

Meanwhile, the Pound (GBP) was also subdued on Monday, undercut by renewed concerns over the UK’s economic resilience. While a risk-on mood gripped global markets, the increasingly risk-sensitive Pound failed to join the advance, slipping against stronger counterparts and treading water elsewhere.

The muted performance came as investors digested fresh evidence of domestic strain. A report from consultancy Alvarez & Marsal flagged UK companies as some of the most financially distressed in Europe – reviving fears about corporate fragility amid persistently high borrowing costs.


Further weighing on sentiment, new figures from the Office for National Statistics (ONS) painted a troubling picture of household finances. In June, more than a quarter of UK adults – 26% – said they couldn’t afford an unexpected but essential expense of £850. That’s the highest proportion since September last year and a stark reminder that the cost-of-living crisis continues to squeeze consumers.

Against this backdrop, upbeat global sentiment offered little solace for the increasingly risk-sensitive Pound.

The spotlight now turns to the UK’s upcoming GDP release, with markets hoping for signs the economy is back on firmer footing. May’s figures are expected to show a slight rebound, with analysts forecasting 0.1% growth following a 0.3% contraction in April.

Such a result could lend the Pound some modest support, though bigger moves will likely come if the data deviates from expectations. A stronger-than-forecast print might breathe fresh life into Sterling, while any renewed contraction would likely drag the currency lower.

On the Euro side, attention is shifting to inflation signals out of Germany. Wholesale price data could prove influential, particularly if it suggests further disinflation in Europe’s largest economy. Softer pricing trends may reinforce expectations for European Central Bank (ECB) interest rate cuts, potentially pressuring the Euro in the short term.

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TAGS: Pound Euro Forecasts