Pound to Euro Exchange Rate Firms as UK Growth Dents Rate-Cut Bets

Modified: Thursday, 15 January 2026 20:01 BST - Written by David Woodsmith

STORY LINK Pound to Euro Exchange Rate Firms as UK Growth Dents Rate-Cut Bets

The Pound to Euro exchange rate (GBP/EUR) consolidated near €1.15 on Thursday, supported by a stronger-than-expected UK growth reading which helped underpin Sterling sentiment.

At the time of writing, GBP/EUR was trading at roughly €1.1555, marking a modest advance from the start of Thursday’s session.

The Pound (GBP) found a firmer footing after the release of the UK’s latest GDP figures surprised to the upside.

Data from the Office for National Statistics showed month-on-month growth accelerated to 0.3% in November, reversing October’s 0.1% contraction and comfortably beating expectations for only a marginal rebound.

The stronger performance helped ease fears that the UK economy may have slipped into contraction towards the end of 2025, despite lingering caution among households and businesses ahead of the autumn budget.

Encouragingly for Sterling, the robust GDP reading also reduced pressure on the Bank of England (BoE) to cut interest rates in the near term, with market pricing for a February rate cut easing in the wake of the data.

The Euro (EUR), meanwhile, struggled to gain traction as investors digested a mixed set of GDP figures from Germany.

Germany’s statistics office confirmed the country returned to growth in 2025, with the economy expanding by 0.2%, in line with forecasts.

However, sentiment was dampened by a downward revision to 2024 GDP, which was cut from –0.2% to –0.5%, underlining the fragility of the recovery in the Eurozone’s largest economy.

The single currency also remained under pressure from ongoing political friction between the US and Europe over Greenland, with recent talks overshadowed by comments from US President Donald Trump on the Arctic territory.

GBP/EUR Forecast: German Inflation Data to Test the Euro

Looking ahead to the end of the week, the Pound Euro exchange rate could draw further support following the release of Germany’s latest inflation figures.

Finalised CPI data is expected to confirm a sharp slowdown in price growth, with annual inflation forecast to fall from 2.3% to 1.8% in December. Such a decline may reignite concerns over weakening domestic demand and the durability of Germany’s economic recovery.

In the meantime, with no major UK data scheduled for release, Sterling’s direction on Friday is likely to be guided largely by broader market sentiment.

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TAGS: Pound Euro Forecasts