Pound to Euro Strikes Three-Week Best as German Production Plunges

Modified: Wednesday, 8 October 2025 20:45 BST - Written by Ben Hughes

STORY LINK Pound to Euro Strikes Three-Week Best as German Production Plunges

The Pound to Euro exchange rate (GBP/EUR) climbed to a three-week high on Wednesday, as grim German industrial production figures reignited concerns about the health of Europe’s largest economy.

At the time of writing, GBP/EUR was trading at €1.1542, marking an uptick of around 0.2% on the day.

The Euro (EUR) weakened on Wednesday after German industrial production recorded a steep 4.3% fall in August – far worse than the anticipated 1% decline.

Germany’s statistics agency suggested the sharp contraction was partly down to seasonal factory shutdowns and retooling during the summer months.

Even so, analysts cautioned that the figures highlight deeper structural problems within Europe’s largest manufacturing sector.

Adding to the pressure on the single currency, continued political turmoil in France further dampened sentiment.

The unexpected resignation of Prime Minister Sébastien Lecornu earlier in the week has fuelled talk of fresh elections, stoking uncertainty in the Eurozone’s second-largest economy.

The Pound (GBP) strengthened on Wednesday, edging higher against several major currencies despite the absence of fresh UK data releases.

Investors appeared to take confidence from persistent expectations that the Bank of England (BoE) will maintain interest rates at elevated levels for longer than many other central banks, offering Sterling some underlying support.

Even so, the upside for the Pound was capped.

Ongoing concerns about the government’s fiscal health and the lack of new domestic indicators left markets hesitant to push the currency much higher.

Pound to Euro Forecast: Markets Eye ECB Minutes

Looking to Thursday, Germany’s latest trade balance report will open the session.

Forecasts point to a modest expansion in the country’s trade surplus, a result that could offer the Euro some limited support.

However, the real spotlight will fall on the publication of the European Central Bank’s (ECB) meeting minutes.

If the records reveal that policymakers remain cautious about cutting interest rates further, the Euro could find additional strength.

That said, political instability in France is likely to remain a key influence on the single currency.

Continued uncertainty may weigh on investor sentiment, while any move toward a snap election could exert fresh downward pressure on EUR.

Meanwhile, with no significant UK economic data due, Pound movement may take its cue from broader Euro dynamics, leaving GBP/EUR largely driven by events on the continent.

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