Pound-to-Euro Steady Despite Strong UK PMI

Modified: Thursday, 21 August 2025 13:06 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Steady Despite Strong UK PMI

The Pound to Euro exchange rate (GBP/EUR) fluctuated in a narrow range on Thursday as both the UK and Eurozone released stronger-than-expected PMI data.

At the time of writing, GBP/EUR was trading at €1.1555, slightly higher than the opening of the European session but having shifted back and forth since markets opened.

The Pound (GBP) gained ground on Thursday, lifted by encouraging government borrowing figures and upbeat preliminary PMI results.

The UK government reported borrowing of just £1.05bn in July, significantly below the £2.6bn forecast. The improvement was partly attributed to higher National Insurance contributions, offering some relief amid concerns about the country’s fragile public finances.

Meanwhile, early August PMI readings provided a further boost for Sterling. Private sector activity picked up to its fastest pace in a year, with the key services PMI jumping to 53.6, beating predictions that it would remain steady at 51.8.

Even so, the uplift was tempered by a continued fall in employment levels, which curbed the Pound’s upside momentum.

The Euro (EUR) found support on Thursday after Eurozone PMI figures came in stronger than anticipated, though they failed to match the UK’s more robust results.


August saw the bloc’s manufacturing sector unexpectedly return to growth, which in turn lifted overall business activity. The composite PMI inched higher from 50.9 to 51.1, defying forecasts of a drop to 50.7.

Elsewhere, developments in Ukraine continued to influence the single currency. Early-week optimism over the possibility of a peace deal began to ebb as diplomatic discussions stalled, with no tangible progress emerging. This loss of momentum kept a lid on the Euro’s advance.

Ukraine Headlines to Steer Pound to Euro Exchange Rate

With little in the way of fresh economic releases at the close of the week, the Pound Euro exchange rate looks set to be driven largely by broader market sentiment.

For the Euro, investors are likely to remain focused on updates surrounding Ukraine. Should hopes for a peace agreement continue to falter amid sluggish diplomacy and diluted security assurances from the US, the single currency may struggle to hold on to its recent gains.

As for the Pound, price action could prove uneven. Persistent speculation that the Bank of England (BoE) may slow its pace of rate cuts could offer support, but concerns about potential tax rises in the autumn risk capping Sterling’s upside.

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TAGS: Pound Euro Forecasts