Pound-to-Euro Rate Sinks as Dollar Surges on US Jobs Shock

Modified: Friday, 1 August 2025 20:21 BST - Written by Frank Davies

STORY LINK Pound-to-Euro Rate Sinks as Dollar Surges on US Jobs Shock

The Pound to Euro exchange rate (GBP/EUR) crashed lower on Friday as global currency markets reacted to a shocking US jobs report.

At the time of writing, GBP/EUR was seen trading at 1.14734, 0.78 per cent lower on the day.

The sharp post-payrolls drop in the US dollar, and corresponding EUR/USD rally and GBP/EUR slide, was driven by a notably weaker-than-expected July jobs report, which cast fresh doubt on the strength of the US labour market.

According to Wells Fargo, “The big miss was in the revisions,” which revealed over 250K fewer jobs added across May and June than previously thought.

“Hiring has slowed to a crawl the past few months,” the bank warned, adding that the six-month average has now slipped to below 90K.

While Fed Chair Powell had described the labour market as “solid” earlier in the week, Wells suggests this latest report “may alter the Committee’s views.”

“We still expect the FOMC to resume easing in September with a 25 bps reduction in rates,” the bank added.


Looking ahead, the Pound to Euro rate may struggle to regain ground in the months ahead, according to analysts at ING, who expect EUR/GBP to climb back to 0.88, equivalent to GBP/EUR falling to 1.136, by year-end.

ING analysts note that Pound Sterling has remained relatively insulated from recent speculative flows into the Euro, driven by February’s Eurozone fiscal expansion. The recent Euro pullback has brought EUR/GBP back to a more neutral range of 0.86–0.87 (currency conversion: GBP/EUR 1.149–1.163).

“It was quite telling to see GBP/USD unchanged in a broadly offered environment for European currencies,” ING commented.

While the Bank of England is expected to cut interest rates gradually, markets are only pricing in 55bps of easing through February, which ING sees as too shallow.

“The risks are skewed to more rather than less easing being priced in – threatening upside risks to EUR/GBP.”

Additional downside risks for the Pound may emerge in November, with ING warning that fiscal tightening in the Autumn Statement could dent sentiment further.

“We suspect EUR/GBP will be more comfortable at 0.88 (GBP/EUR ~1.136) by year-end.”

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TAGS: Pound Euro Forecasts