Pound Euro Steady Despite Cooling Inflation

Modified: Thursday, 8 January 2026 08:31 BST - Written by David Woodsmith

STORY LINK Pound Euro Steady Despite Cooling Inflation

The Pound to Euro exchange rate (GBP/EUR) remained rangebound on Wednesday as markets reacted cautiously to the Eurozone’s latest inflation figures, which failed to provide a clear directional catalyst.

At the time of writing, GBP/EUR was trading near €1.1547, showing little change from its opening levels.

The Pound (GBP) traded without clear direction through the session, with a lack of meaningful UK economic releases leaving Sterling short of fresh drivers.

In the absence of domestic data, broader market dynamics dictated price action. The Pound’s growing sensitivity to shifts in risk sentiment kept it confined to a narrow range, as lingering geopolitical concerns offset pockets of tentative economic optimism.

Meanwhile, the Euro (EUR) struggled to gain momentum following the release of the Eurozone’s latest consumer price index.

The data showed headline inflation easing from 2.1% to 2.0% in December, in line with expectations. Core inflation, however, slipped unexpectedly from 2.4% to 2.3%, signalling a modest cooling in underlying price pressures.

Despite the softer inflation backdrop, the single currency avoided notable losses. Investors noted that the sharper slowdown previously seen in German inflation was not replicated across the wider bloc, reducing the likelihood of any immediate reassessment of European Central Bank (ECB) policy expectations.

As a result, EUR remained broadly steady, leaving the Pound Euro pair stuck in familiar territory.

GBP/EUR Forecast: Eurozone Releases in the Spotlight

Looking ahead, Germany’s latest factory orders data will be the first potential catalyst on Thursday. Economists expect a 1% contraction in November, and confirmation of weaker demand in Europe’s largest economy could place renewed pressure on the Euro.

Later in the day, additional Eurozone releases may help stabilise the single currency. The bloc’s economic sentiment index is forecast to hold at 97 in December — its strongest reading since April 2023 — while the unemployment rate is expected to remain unchanged at 6.4%.

Beyond the data, geopolitical developments remain a key variable for EUR sentiment. Further remarks from US officials regarding Greenland could unsettle markets if tensions escalate.

For the Pound, the domestic calendar remains light, leaving Sterling without obvious near-term drivers. In the absence of UK data, GBP is likely to take its cues from broader market sentiment and any domestic political or economic headlines that emerge.

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TAGS: Pound Euro Forecasts