Pound to Euro Dips as Traders Price in BoE Rate Cut

Modified: Thursday, 23 October 2025 23:30 BST - Written by David Woodsmith

STORY LINK Pound to Euro Dips as Traders Price in BoE Rate Cut

The Pound to Euro exchange rate (GBP/EUR) slipped on Thursday afternoon as renewed speculation over Bank of England (BoE) interest rate cuts weighed on Sterling, while investors awaited key Eurozone confidence data.

At the time of writing, GBP/EUR was trading around €1.147, down roughly 0.27% from Thursday’s opening levels.

The Euro (EUR) firmed modestly during the European session, supported by cautious market sentiment and positioning ahead of fresh data from the bloc.

Although risk appetite improved slightly earlier in the day, investors remained wary before the release of the Eurozone’s latest consumer confidence figures.

Analysts expect sentiment to weaken again in October, reflecting concerns over slowing growth and persistent political uncertainty in France and Germany.

Even so, the single currency benefited from broad-based Sterling weakness, allowing EUR to climb back toward the €1.147 handle.

The Pound (GBP) meanwhile extended its post-CPI slide, with traders continuing to price in earlier BoE rate cuts after Wednesday’s weaker-than-expected UK inflation figures.

Headline CPI held steady at 3.8% rather than rising to 4%, while core inflation unexpectedly slipped to 3.5%. The data underscored fading price pressures and bolstered the case for monetary easing before year-end.

As a result, Sterling sentiment remained fragile throughout Thursday’s session, with investors increasingly positioning for a potential December rate cut.

Market caution ahead of Friday’s retail sales and PMI data also limited appetite for GBP, leaving the currency struggling to recover.

GBP/EUR Forecast: UK Retail Sales and PMIs to Set the Tone

Looking ahead, movement in the Pound Euro exchange rate is likely to intensify on Friday as both the UK and Eurozone publish a series of key releases.

UK retail sales for September are expected to show a sharp monthly decline of around -0.2%, highlighting continued consumer weakness and potentially extending Sterling’s downside.

However, preliminary October PMIs could provide some relief if the UK’s vital services sector shows signs of resilience, hinting that growth momentum may be stabilising.

Across the Channel, the Eurozone’s flash PMIs are projected to reveal a mixed picture, with manufacturing still in contraction but services holding narrowly above 50.

If the data confirms a further slowdown in factory activity, the Euro’s recent gains could fade, potentially allowing GBP/EUR to find support heading into the weekend.

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TAGS: Pound Euro Forecasts