Pound-to-Euro Rate Flat as Defence Risks Offset German Data

Modified: Wednesday, 28 January 2026 20:31 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Rate Flat as Defence Risks Offset German Data

The Pound to Euro exchange rate (GBP/EUR) traded without clear direction on Wednesday, as an upbeat German data release failed to translate into sustained support for the single currency amid lingering European defence worries.

At the time of writing, GBP/EUR was trading at €1.1504, little changed from its opening levels.

The Euro (EUR) held its ground on Wednesday but struggled to build momentum, even as fresh data out of Germany painted a slightly brighter picture.

Consumer confidence in the Eurozone’s largest economy improved more than expected ahead of February. The index rose to -24.1 from a near two-year low of -26.9, beating forecasts for a more modest uptick to -25.8.

Despite this, the Euro remained subdued, in part due to its inverse relationship with the US Dollar (USD). After coming under heavy selling pressure earlier in the week, USD clawed back some losses during Wednesday’s session, capping any upside in EUR.

The single currency was also weighed down by broader geopolitical unease. Recent tensions between the US and the EU over Greenland, alongside the unresolved Russia-Ukraine conflict, have sharpened concerns around Europe’s defence readiness and economic vulnerabilities.

Speaking at the European Defence Agency’s annual conference, several EU officials warned of mounting strategic risks facing the bloc and the scale of policy shifts required to address them. These comments appeared to unsettle EUR investors, limiting enthusiasm for the common currency.


The Pound (GBP) traded in a narrow range on Wednesday, with Sterling struggling to find direction in the continued absence of meaningful UK economic data.

With the domestic calendar largely bare throughout the week, GBP investors were left with little incentive to shift positions. This lack of fresh catalysts kept price action muted, leaving the Pound drifting without a clear sense of momentum.

GBP/EUR Forecast: Can Eurozone Data Lift the Euro?

Looking ahead, Thursday’s focus turns to the Eurozone’s latest economic sentiment index. Forecasts suggest confidence across the bloc improved in January, a result that could offer the Euro some modest support. However, any unexpected dip in morale – potentially linked to ongoing EU-US tensions – may instead leave the single currency on the back foot.

Movements in the US Dollar are also likely to remain influential. Should selling pressure on the ‘Greenback’ resume, perhaps triggered by President Trump nominating a dovish candidate for Federal Reserve Chair, EUR exchange rates could find additional upside.

For the Pound, the outlook remains subdued. With UK economic data still thin on the ground through Thursday’s session, Sterling is likely to take its cues from broader market sentiment rather than domestic fundamentals.

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TAGS: Forecasts