Euro to Pound Sterling Outlook: EUR Awaits ifo Boost as GBP Struggles

Modified: Tuesday, 23 September 2025 23:30 BST - Written by Tim Boyer

STORY LINK Euro to Pound Sterling Outlook: EUR Awaits ifo Boost as GBP Struggles

The Pound to Euro exchange rate (GBP/EUR) slipped on Tuesday as weak UK PMI data undercut Sterling’s early gains.

By the afternoon, GBP/EUR was trading at €1.1434, down from an earlier peak of €1.1467 as investors reacted to signs of slowing momentum in the UK economy.

The Pound (GBP) fell after September’s flash PMIs revealed a sharper deceleration in private sector growth than expected.

Manufacturing output contracted more steeply, while the services PMI dropped from 54.2 to 51.9 against forecasts of 53.5. The composite reading fell to 51 – a four-month low – missing projections of 53.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the data painted a grim picture, citing “weakening growth, slumping overseas trade, worsening business confidence and further steep job losses.”

He also pointed to easing inflationary pressures, which may encourage the Bank of England to lean further towards rate cuts.

The downbeat release fuelled renewed anxiety about the UK’s outlook in the run-up to the autumn budget.


The Euro (EUR) made little headway despite the Pound’s weakness. A mixed set of Eurozone PMIs showed manufacturing slipping back into contraction while services surprised to the upside, leaving the composite index fractionally higher.

However, escalating security concerns overshadowed the modest improvement.

Airports in Copenhagen and Oslo were temporarily closed after drones were detected in their airspace, fuelling speculation of Russian involvement following recent incidents in Estonia and Poland.

The geopolitical uncertainty offset data support, leaving the Euro unable to extend gains against Sterling.

British Pound to Euro Forecast: German Sentiment and BoE Remarks Ahead

Looking ahead, Wednesday’s focus will be Germany’s ifo business climate index.

A forecast rise from 89 to 89.2 would mark a sixth straight monthly improvement and the strongest reading since May 2023, potentially lending the Euro fresh support.

For the Pound, attention will turn to remarks from Bank of England policymaker Megan Greene.

As one of the MPC’s more hawkish voices, a cautious tone from Greene could help Sterling steady if she pushes back against expectations of further rate cuts.

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TAGS: Euro Pound Forecasts