Pound-to-Euro Rises as Services PMI Eases Growth Fears

Modified: Wednesday, 3 December 2025 22:01 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Rises as Services PMI Eases Growth Fears

The Pound to Euro exchange rate (GBP/EUR) edged higher on Wednesday, with markets partially unwinding the sharp post-budget selling that had dragged Sterling lower earlier in the week.

At the time of writing, GBP/EUR was trading at €1.1395, up roughly 0.3% on the day.

The Pound (GBP) found support on Wednesday as traders stepped in to buy Sterling following several days of losses.

After its initial budget-day surge, GBP had steadily weakened, with GBP/EUR slipping back below pre-budget levels. This left Sterling looking oversold, prompting traders to take advantage of discounted levels and drive a modest rebound.

Sentiment improved further when the UK’s final services PMI for November was revised higher. The index was confirmed at 51.3 — better than the flash estimate of 50.5, though still softer than October’s 52.3.

The figures suggested the UK’s dominant services sector is cooling, but not as sharply as initially feared. Activity slowed but remained comfortably above stagnation, helping to ease some of the gloom surrounding the sector.

The Euro (EUR) opened Wednesday on mixed footing, buffeted by rising geopolitical tension, a softer US Dollar (USD), and firmer Eurozone data.

Tensions between Russia and Europe escalated again after US–Russia peace discussions failed to progress on Tuesday night. The Kremlin’s insistence that it does not seek conflict — while simultaneously signalling readiness for one — unsettled markets and left EUR under pressure.

Even so, the single currency found limited support from a weaker ‘Greenback’ and stronger Eurozone PMI data.

The bloc’s final services PMI for November was revised higher from 53.1 to 53.6, pointing to a more solid pickup in activity compared with October’s 53. The improvement helped cushion the Euro’s downside — though it still slipped against Sterling.

GBP/EUR Forecast: ECB Commentary to Steer the Euro

Looking ahead, the Eurozone’s retail sales figures land on Thursday. Economists expect a slight uptick for October, which may provide modest support for the Euro — though the improvement is unlikely to spark major movement.

Attention will then shift to commentary from senior European Central Bank (ECB) officials, including Chief Economist Philip Lane and Vice-President Luis de Guindos. If their tone leans hawkish, EUR could firm as investors adjust expectations around the ECB’s policy path.

For the Pound, a quiet UK data calendar means GBP/EUR movement will be driven by broader market sentiment and residual reaction to last week’s autumn budget. If political unease or fiscal questions resurface, Sterling may struggle to extend Wednesday’s recovery.

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TAGS: Pound Euro Forecasts