Pound to Euro Price News, Forecast: GBP/EUR Steady after Mixed Manufacturing PMIs

Modified: Friday, 2 January 2026 11:16 BST - Written by David Woodsmith

STORY LINK Pound to Euro Price News, Forecast: GBP/EUR Steady after Mixed Manufacturing PMIs

The Pound to Euro exchange rate (GBP/EUR) struggled to find direction on Friday as investors digested the latest manufacturing PMI releases from both the UK and the Eurozone.

At the time of writing, GBP/EUR was trading near €1.1479, little changed from its opening levels at the start of the session.

The Euro (EUR) softened on Friday following a downward revision to the Eurozone’s final manufacturing PMI for December.

The index was revised lower from an initial reading of 49.2 to 48.8, marking the weakest performance in the factory sector since April and underscoring the depth of the ongoing manufacturing downturn.

The data highlighted persistent headwinds for Eurozone manufacturers, with shrinking order books and falling backlogs driving further job losses. This reinforced concerns that weakness in the sector is likely to persist into the early months of 2026.

EUR sentiment was also restrained by its inverse relationship with the US Dollar, which found tentative support during the first full trading session of the new year.

The Pound (GBP) likewise lacked momentum, trading in a narrow range on the first trading day of 2026 despite evidence that the UK manufacturing sector continued to expand at the end of last year.


Although the PMI reached its strongest level since September 2024, the final reading was revised down to 50.6 from an earlier estimate of 51.2, taking some shine off the recovery narrative and limiting demand for Sterling.

Attention is now focused on whether the UK’s factory sector can maintain its improvement into the new year. Some analysts argue that December’s Bank of England rate cut could lend support to investment, though confidence across the sector remains fragile.

GBP/EUR Forecast: Inflation Data to Test Euro Resilience?

Looking ahead, the next major catalyst for the Pound to Euro exchange rate is likely to be the Eurozone’s latest consumer price index, due for release on Wednesday.

Economists expect inflation pressures to have eased further in December. Confirmation of softer price growth could add to pressure on the single currency by reinforcing expectations that monetary policy will remain accommodative.

Later in the week, attention will turn to Germany’s factory orders and industrial production data. Continued weakness in the Eurozone’s largest economy would likely weigh on broader EUR sentiment.

By contrast, the UK data calendar is relatively light. December’s final services PMI is the only notable release, and Sterling could come under pressure if the reading is revised lower, echoing the downgrade seen in manufacturing data.

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TAGS: Forecasts