Pound to Euro Under Pressure

Modified: Wednesday, 5 November 2025 09:30 BST - Written by David Woodsmith

STORY LINK Pound to Euro Under Pressure

The Pound Euro (GBP/EUR) exchange rate slipped on Tuesday as investors adopted a cautious stance ahead of the UK’s autumn budget, while a risk-off market tone offered support to the Euro.

At the time of writing, GBP/EUR was trading around €1.1353, down roughly 0.4% on the day.

The Pound (GBP) fell after Chancellor Rachel Reeves warned of the UK’s “challenging fiscal position” in a speech outlining her priorities ahead of the November budget. Investors interpreted her comments as a signal that tax increases and tighter spending controls may be necessary to restore fiscal balance.

The remarks reignited concerns over the economic impact of fiscal tightening and prompted a modest uptick in Bank of England (BoE) rate cut expectations, with markets now pricing a 35% chance of a move at this week’s policy meeting.

As a result, Sterling remained on the defensive through Tuesday’s European session, with demand limited by renewed caution surrounding the UK’s economic and fiscal outlook.

Meanwhile, the Euro (EUR) gained modestly, supported by a shift towards risk aversion across global markets. Investors sought relative stability in the single currency amid softening sentiment and a lack of major Eurozone data releases.

While the Euro’s advance was moderate, the broadly risk-off tone helped the common currency stay resilient against its risk-sensitive peers, leaving EUR exchange rates marginally firmer on the day.

GBP/EUR Forecast: UK and Eurozone Data in Focus

Looking ahead, attention on Wednesday will turn to key data releases from both regions.

Germany’s factory orders for September are expected to show a monthly decline, which could weigh on early Euro sentiment. However, an improvement in the bloc’s services PMI readings may offset some of the weakness later in the session.

For the Pound, the UK’s own services PMI will also be closely watched. A modest improvement could lend brief support to Sterling, though any rebound may be short-lived if BoE rate cut bets continue to build or if budget concerns persist.

With both currencies facing competing headwinds, GBP/EUR could remain rangebound midweek, with direction likely driven by shifts in risk appetite and central bank expectations.

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TAGS: Pound Euro Forecasts