Pound-to-Euro Under Pressure as UK Economy Stalls

Modified: Thursday, 13 November 2025 22:15 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Under Pressure as UK Economy Stalls

The Pound to Euro exchange rate (GBP/EUR) fell further on Thursday, sliding to its lowest level in two and a half years after disappointing UK growth data reinforced fears of economic stagnation.

At the time of writing, GBP/EUR was trading around €1.1321, only slightly lower on the day but still near its weakest point since mid-2021.

The Pound (GBP) struggled after fresh figures from the Office for National Statistics (ONS) showed that the UK economy all but stalled in the third quarter.

Quarterly GDP rose just 0.1%, slowing from 0.3% in the previous quarter, while September’s monthly data unexpectedly contracted by 0.1%.

This represented the slowest pace of growth since late 2023, when the UK briefly dipped into recession. Economists attributed part of the weakness to temporary factory disruptions caused by a cyberattack on Jaguar Land Rover in September, but the broader picture pointed to sluggish momentum across sectors.

The weak report added to concerns about the UK’s fiscal outlook ahead of Chancellor Rachel Reeves’s autumn budget and fuelled speculation that the Bank of England (BoE) may press ahead with a rate cut in December.

Markets now see the probability of a BoE move at over 70%, with investors increasingly convinced that tighter fiscal policy and softening data will push policymakers to ease sooner rather than later.

The Euro (EUR), meanwhile, found support from a weaker US Dollar (USD) as markets breathed a sigh of relief following the resolution of the prolonged US government shutdown.

Improved sentiment encouraged investors to rotate away from the safe-haven Dollar and back toward risk-sensitive assets, indirectly boosting demand for the single currency.

However, the Euro’s advance was tempered after Eurozone industrial production data showed a smaller-than-expected rise in September, underlining persistent weakness in the region’s manufacturing sector.

GBP/EUR Forecasts: Eurozone GDP in Focus

Looking ahead, the Pound to Euro exchange rate could face further downside pressure heading into the weekend if upcoming Eurozone GDP revisions confirm stronger growth across the bloc.

A robust print would likely provide the Euro with additional tailwinds, pushing GBP/EUR closer to the €1.13 handle.

Meanwhile, political uncertainty continues to cast a shadow over the Pound as speculation builds that Prime Minister Keir Starmer could face an internal leadership challenge if next week’s UK budget fails to convince markets or his own party.

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TAGS: Pound Euro Forecasts