Pound-to-Euro Unmoved by Hot UK Inflation

July 16, 2025 - Written by David Woodsmith

STORY LINK Pound-to-Euro Unmoved by Hot UK Inflation

The Pound Euro (GBP/EUR) exchange rate was trapped in a narrow range on Wednesday following the release of the UK’s latest inflation reading.

At the time of writing, the GBP/EUR was trading at around €1.1524, virtually unchanged from Wednesday’s opening levels.

The Pound (GBP) traded sideways on Wednesday, largely muted against most major peers, despite the surprise upside in the UK’s latest inflation figures.

June’s consumer price index (CPI) came in hotter than forecast, with headline inflation climbing to 3.6%, up from 3.4%, and core inflation rising from 3.5% to 3.7%.

The unexpected uptick added pressure to the Bank of England’s (BoE) policy outlook, suggesting inflation remains stubbornly above target.

However, the data failed to meaningfully undermine market expectations for an August rate cut, as investors looked ahead to more influential UK data releases later in the week.

As a result, Sterling remained muted through Wednesday’s European session, showing limited reaction to the hotter-than-expected inflation print.


The Euro (EUR) held its ground on Wednesday, showing little movement against most major currencies despite renewed concerns over France’s political landscape.

Tensions flared as the French Prime Minister proposed scrapping two national holidays in an effort to reduce the country’s budget deficit, a move that drew strong backlash.

The National Rally party warned it could seek to bring down the government if the plan isn’t reversed, reigniting worries over political stability in one of the Eurozone’s largest economies.

Even so, the single currency remained resilient during Wednesday’s European session, as broader Eurozone sentiment helped offset the impact of France’s domestic unrest.

As we head into Thursday’s European session, the Pound Euro (GBP/EUR) exchange rate could be influenced by fresh labour market data from the UK.

While the UK unemployment rate for May is expected to remain steady, wage growth is forecast to slow.

Average earnings excluding bonuses are predicted to dip from 5.2% to 4.9%, and if confirmed, this could drag on the Pound by reinforcing expectations for a Bank of England interest rate cut.


Meanwhile, for the Euro, attention will turn to the Eurozone’s finalised inflation figures for June.

Should the data confirm that headline CPI has settled at the European Central Bank’s (ECB) 2% target, it may dampen speculation of further rate hikes, potentially putting some pressure on the Euro during Thursday’s trade.

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TAGS: Pound Euro Forecasts