Pound-to-Euro Rebounds Amid Doubts over EU-US Trade Deal

Modified: Monday, 28 July 2025 12:00 BST - Written by Toni Johnson

STORY LINK Pound-to-Euro Rebounds Amid Doubts over EU-US Trade Deal

The Pound to Euro exchange rate (GBP/EUR) rebounded on Monday, having slumped to a fresh two-year low earlier in the session in the wake of news surrounding a newly signed EU-US trade agreement.

At the time of writing, GBP/EUR was trading at approximately €1.1492—up around 0.7% from the low of €1.1410 touched earlier in the day.

The Euro (EUR) opened the week on firmer footing after confirmation that the EU had reached a trade accord with the United States.

The agreement - unveiled after weekend talks between US President Donald Trump and European Commission President Ursula von der Leyen in Scotland - established a 15% tariff cap on many EU exports, avoiding the steeper 30% duties previously threatened by Washington.

Despite this initial boost, the single currency struggled to sustain momentum, with EUR backtracking through the European session.

Investor confidence appeared to wane as the fine print of the deal came under scrutiny. Analysts noted that although the worst-case scenario was avoided, European exporters still face elevated trade barriers compared to pre-deal levels, with German industry expressing concerns over the financial burden of even a reduced tariff rate.

The Pound (GBP) drifted higher on Monday, gaining ground despite an absence of market-moving domestic data.


The rally in Sterling raised some eyebrows, particularly given the recent string of underwhelming UK economic indicators and renewed questions over the government’s fiscal trajectory.

Investor caution lingers around potential tax rises in the Autumn Budget, with fears mounting that Chancellor Rachel Reeves may be forced to tighten policy to remain within her own fiscal targets following a dilution of planned welfare reforms.

Looking ahead, the Euro may face fresh pressure if upcoming Eurozone GDP figures confirm the bloc’s economy stagnated in the second quarter.

A flat reading would likely reinforce expectations for the European Central Bank (ECB) to continue easing policy, potentially weighing further on the single currency.

Meanwhile, Tuesday’s consumer credit data from the Bank of England (BoE) could dent Pound sentiment if the report suggests a further pullback in household spending—another sign the UK economy may be losing steam.

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TAGS: Pound Euro Forecasts