Pound-to-Euro Slips as UK Inflation Cools

Modified: Wednesday, 19 November 2025 21:00 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Slips as UK Inflation Cools

The Pound to Euro exchange rate (GBP/EUR) edged lower on Wednesday, following the release of the UK’s latest consumer price index.

At the time of writing, the GBP/EUR exchange rate was trading at around €1.1393, leaving the pairing only slightly down from the start of the session.

The Pound (GBP) came under mild pressure on Wednesday after the UK’s latest consumer price index confirmed that inflation cooled in October for the first time since May.

According to the Office for National Statistics (ONS), headline inflation eased from 3.8% to 3.6%, while core inflation slipped from 3.5% to 3.4%.

Both readings aligned with market expectations.

The slowdown was largely driven by softer energy price growth compared with the same period last year.

The cooling print reinforced expectations of another Bank of England (BoE) interest rate cut in December, with analysts increasingly confident that the balance will tip in favour of the doves next month.

Even so, Sterling’s losses remained modest. The drop in inflation also drove down UK gilt yields, relieving some of the pressure on Chancellor Rachel Reeves ahead of next week’s highly anticipated budget.

The Euro (EUR) found modest support on Wednesday as a deepening selloff in global equity markets bolstered demand for safer assets.

This gave the single currency some upward momentum in an otherwise data-light session for Eurozone-focused traders.

The bloc’s own finalised inflation figures for October were confirmed at 2.1% as expected, having no material impact on European Central Bank (ECB) rate expectations and offering little reason for EUR investors to shift their positions.

GBP/EUR Forecast: Upbeat Eurozone PMIs to Lift the Euro?

Looking to the second half of the week, the Pound Euro exchange rate may be steered by the release of the UK’s and Eurozone’s latest PMI surveys.

Preliminary figures from the Eurozone are expected to show another improvement in private sector activity in November, which could help the Euro to end the session on a positive note.

By contrast, UK PMIs are forecast to point to a further moderation in economic activity, with uncertainty surrounding the autumn budget likely contributing to weaker business sentiment.

Such a divergence could leave the Pound exposed to additional downside.

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TAGS: Pound Euro Forecasts