Will GBP/EUR Extend Gains after Hot UK Inflation? Pound to Euro Forecast

Modified: Wednesday, 20 August 2025 14:15 BST - Written by David Woodsmith

STORY LINK Will GBP/EUR Extend Gains after Hot UK Inflation? Pound to Euro Forecast

Pound to Euro Exchange Rate Forecast to Face Pressure on Tomorrow's PMIs

The Pound Euro (GBP/EUR) exchange rate firmed on Wednesday as the UK and the Eurozone released their respective inflation figures.

At the time of writing, the GBP/EUR was trading at around €1.1601, up almost 0.2% from Wednesday’s opening levels.

The Pound (GBP) firmed across the board on Wednesday, buoyed by the release of hotter-than-expected UK inflation data.

Figures for July revealed that both headline and core CPI came in above forecasts.

Headline inflation rose from 3.6% to 3.8%, overshooting projections of 3.7%, while core CPI also inched higher, moving from 3.7% to 3.8% instead of holding steady as expected.

The stronger print fuelled expectations that the Bank of England (BoE) could adopt a more measured stance on lowering interest rates, which in turn gave Sterling a notable boost through the mid-week session.


The Euro (EUR) traded steadily against most major rivals on Wednesday after the Eurozone published its latest CPI figures.

August’s data revealed no change in inflation, with headline CPI holding at 2% and core inflation fixed at 2.3%.

With headline inflation matching the European Central Bank’s (ECB) 2% target, the Euro found it difficult to draw renewed support.

Looking ahead to Thursday, the Pound Euro (GBP/EUR) exchange rate is likely to be influenced by the release of the latest PMI surveys from both the UK and Eurozone.

In Britain, the manufacturing index is expected to remain stuck in contraction territory, while the services index is set to hold steady above 50.

Such an outcome may provide little impetus for Sterling, potentially leaving GBP to drift through the session without a clear trajectory.

Meanwhile, the Eurozone’s flash PMIs for August are predicted to show a slowdown across both manufacturing and services.


If confirmed, the data could place the Euro under pressure, limiting the single currency’s appeal on Thursday.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts