Pound-to-Euro Climbs as Eurozone Growth Falters

The Pound to Euro exchange rate (GBP/EUR) advanced on Wednesday, closing in on the €1.16 threshold following weak economic data out of the Eurozone.

At the time of writing, GBP/EUR was trending around €1.1576, marking a gain of about 0.2% from the start of the session.

The Euro (EUR) came under modest pressure in midweek trade, after the Eurozone’s latest GDP figures showed the region’s recovery was losing momentum.

The flash estimate for Q2 revealed the bloc’s economy grew just 0.1%, a steep slowdown from the 0.6% expansion seen in the first quarter.

The loss of momentum was largely attributed to ongoing global trade tensions, particularly uncertainty surrounding US tariffs pushed by President Donald Trump.

While the marginal uptick in GDP was slightly better than the flat growth forecast, the data nonetheless reinforced expectations that the European Central Bank (ECB) may need to continue cutting interest rates to support the flagging economy.

The Pound (GBP) saw limited movement on Wednesday, with the absence of any fresh UK data prompting a relatively flat performance.


Investors largely sat on their hands, digesting a recent string of downbeat UK economic indicators while waiting for signals on how the Bank of England (BoE) and Treasury might respond to the recent weakness in the second half of the year.

Sterling’s subdued tone also mirrored a broader mood across markets, as investors looked ahead to key developments in the US, specifically, the upcoming GDP release and the Federal Reserve’s latest policy decision, both of which were expected to trigger volatility across major currency pairs.

Looking to the remainder of the week, the Pound Euro exchange rate could remain supported if scepticism around the new EU-US trade agreement continues to build.

The deal, which has already sparked criticism from some EU leaders, risks unravelling if it fails to gain the backing of major member states like Germany and France.

In addition, the Eurozone’s flash inflation figures are due out before the weekend. If the consumer price index points to a drop in price pressures, it could pile further pressure on the ECB to consider another rate cut.

Meanwhile, in the absence of major UK releases, the Pound’s direction will likely be influenced by broader risk trends and global economic cues.

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