Pound-to-Euro Dips below €1.15 on Weak Labour Data

Modified: Tuesday, 20 January 2026 20:31 BST - Written by Ben Hughes

STORY LINK Pound-to-Euro Dips below €1.15 on Weak Labour Data

The Pound to Euro exchange rate (GBP/EUR) moved lower on Tuesday, sliding to its weakest level in around a fortnight after the release of underwhelming UK labour market data.

At the time of writing, GBP/EUR was trading close to €1.1498, marking a decline of roughly 0.3% from Tuesday’s opening levels.

The Pound (GBP) came under renewed selling pressure following the UK’s latest employment report.

Figures from the Office for National Statistics (ONS) showed unemployment remained stuck at a four-year high of 5.1% in November, while overall employment continued to trend lower.

The data also highlighted a further easing in private-sector wage growth, which slowed to its weakest pace in five years.

November’s slowdown was widely attributed to uncertainty in the run-up to Chancellor Rachel Reeves’s autumn budget, with many firms opting to delay hiring decisions.

Signs that the labour market is loosening are likely to strengthen the hand of more dovish policymakers at the Bank of England (BoE), increasing speculation that interest rate cuts could come sooner rather than later and weighing on Sterling sentiment.

The Euro (EUR), by contrast, found solid support on Tuesday, benefitting from its inverse relationship with a softer US Dollar (USD).

The ‘Greenback’ remained on the back foot as US President Donald Trump continued to unsettle markets with comments on Greenland, warning there would be ‘no turning back’ while reiterating tariff threats against European nations opposing his position.

Adding to the Euro’s appeal was a sharp improvement in German economic sentiment, with confidence in the Eurozone’s largest economy climbing to its strongest level since July 2021.

GBP/EUR Outlook: UK Inflation Data in Focus

Looking ahead, attention turns to Wednesday’s release of the UK consumer price index, which is likely to be the next key driver for the Pound Euro exchange rate.

Markets are forecasting a modest rebound in inflation, with headline CPI expected to tick up from 3.2% to 3.3%.

If confirmed, this would mark the first increase in inflation since July and could lend Sterling some support by prompting investors to reassess the timing of the next Bank of England rate cut.

Meanwhile, developments surrounding Greenland are likely to remain in focus for Euro traders, particularly as President Trump is expected to address the issue during his appearance in Davos later on Wednesday.

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TAGS: Pound Euro Forecasts