Pound-to-Euro Dips Ahead of Eurozone Inflation

Modified: Thursday, 31 July 2025 22:32 BST - Written by Tim Boyer

STORY LINK Pound-to-Euro Dips Ahead of Eurozone Inflation

The Pound to Euro exchange rate (GBP/EUR) dipped to lows of 1.155 on Thursday after Germany published its latest inflation data.

At the time of writing, the GBP/EUR was trading at around €1.1564, virtually unchanged from Thursday’s opening levels.

The Euro (EUR) strengthened against several major peers on Thursday following the release of Germany’s latest consumer price index (CPI).

July’s figures showed that headline inflation in Germany held steady at 2%, defying expectations of a slight drop to 1.9%.

According to economists at ING Bank, "The just-released flash estimate of German inflation for July shows that the disinflationary process continues in baby steps. Headline inflation, according to the national measure, remained unchanged at 2% year-on-year, while the European measure dropped to 1.8% YoY, from 2.0% YoY in June. Core inflation remained unchanged at 2.7% YoY. "

In contrast, the harmonised index, the European Central Bank’s preferred measure, edged down to 1.8%, falling just short of a 1.9% forecast.

Despite the softer harmonised reading, the Euro managed to advance following the release, with markets largely shrugging off the dip in inflation.


The Pound (GBP) traded without a clear direction on Thursday, with Sterling reacting primarily to global market sentiment amid a continued lack of UK economic data.

In a mildly optimistic market environment, GBP slipped against fellow risk-sensitive currencies, as its performance mirrored the broader appetite for risk.

At the same time, the improved mood dampened demand for safe-haven assets, allowing the Pound to remain steady against certain more defensive currencies.

Looking ahead to Friday’s European session, the Pound to Euro (GBP/EUR) exchange rate will be influenced by fresh inflation data out of the Eurozone.

Headline CPI for July is expected to slip slightly from 2% to 1.9%, moving just below the European Central Bank’s 2% inflation target.

Meanwhile, core inflation is also projected to ease, falling from 2.3% to 2.2%.

If Friday’s figures align with forecasts, it could intensify speculation over potential interest rate cuts from the ECB, which would likely place additional pressure on the Euro on Friday.


As for the Pound, investors will be watching the UK’s finalised services PMI.

While the index is expected to rise to 48.2 from a previous reading of 47.7, it would still remain in contraction territory below the 50 threshold, limiting any upside potential for Sterling and possibly leaving it vulnerable heading into the weekend.

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TAGS: Pound Euro Forecasts