Pound-to-Euro Rate Closer to €1.15 as Eurozone Confidence Slumps

Modified: Monday, 4 August 2025 17:42 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Rate Closer to €1.15 as Eurozone Confidence Slumps

The Pound to Euro exchange rate (GBP/EUR) began the week on the front foot, climbing as sentiment in the Eurozone took an unexpected hit.

At the time of writing, GBP/EUR was trading around €1.1486, up approximately 0.3% from Monday’s opening levels.

The Euro (EUR) came under pressure on Monday after a sharp decline in investor confidence across the Eurozone.

Sentix’s latest index fell into negative territory, dropping from 6.2 to –3.7 in August, far below the modest dip to 4.5 that markets had anticipated.

The survey pointed to falling confidence in both current economic conditions and future expectations. Analysts linked the souring mood to disappointment over the recent EU–US trade agreement, which failed to deliver the clarity and relief markets had hoped for.

Sentix Managing Director Manfred Huebner described the deal as a ‘real mood killer,’ underlining the scale of investor frustration with the agreement’s vague terms and unresolved tariff issues.

The Pound (GBP) advanced against the Euro, but gains elsewhere were limited as markets turned cautious ahead of the Bank of England’s (BoE) upcoming interest rate decision.


With a 25 basis point cut widely expected this Thursday, most GBP investors were hesitant to make bold moves. The real driver of Sterling’s direction will likely be the BoE’s tone and outlook.

If Governor Andrew Bailey hints that further cuts are on the table later this year, Sterling may lose steam. However, a more measured or hawkish message could help limit downside risk for the Pound.

Looking ahead, before the BoE decision lands, the Pound to Euro exchange rate (GBP/EUR) may respond to key PMI data from both sides of the Channel.

The UK’s final services PMI for July is expected to confirm a slowdown in activity, a potential drag on the Pound if investors interpret it as a warning sign for the broader economy.

Meanwhile, the Euro could find support if the Eurozone’s own PMI shows stronger-than-expected growth in the service sector.

That said, the greater focus may fall on the region’s producer price index. If factory input costs rose at the end of Q2, it could fuel speculation that the European Central Bank (ECB) will hold off on further easing, potentially offering the Euro some support.

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TAGS: Pound Euro Forecasts