Buyer Alert: Best Pound-to-Euro Rate in Five Months

Modified: Wednesday, 4 February 2026 19:01 BST - Written by David Woodsmith

STORY LINK Buyer Alert: Best Pound-to-Euro Rate in Five Months

The Pound to Euro exchange rate (GBP/EUR) climbed to a fresh five-month high on Wednesday as traders digested final services PMI readings from the UK and the Eurozone alongside the bloc’s latest inflation figures.

At the time of writing, GBP/EUR was trading around €1.1602, just below the session peak of €1.1606 struck earlier in the day.

The move higher came as the Euro struggled to build momentum following softer-than-expected Eurozone data, while Sterling held firm despite a modest downward revision to UK services activity.

The Euro opened the European session on the back foot after the Eurozone’s final services PMI for January was revised lower. The index fell to 51.6, down from 52.4 in December, reinforcing concerns that economic momentum is slowing at the start of the year.

While the single currency managed to recover some ground after GBP/EUR briefly hit a new five-month high, the rebound proved limited. Pressure on the Euro intensified following the release of the Eurozone’s latest consumer price index.

Headline inflation eased to 1.7% in January, in line with expectations, but the Euro was further weighed down after core inflation unexpectedly slipped from 2.3% to 2.2%, strengthening the view that underlying price pressures are easing.

The Pound, meanwhile, held its ground after the UK’s final services PMI for January was revised marginally lower. Although the revision came in below preliminary estimates, the data continued to point to a solid expansion in the UK’s dominant services sector.

Activity accelerated to its strongest level since August 2025, helping underpin Sterling and allowing GBP/EUR to remain close to five-month highs despite the softer revision.

GBP/EUR Forecast: BoE and ECB Rate Decisions Take Centre Stage

Looking ahead, attention for the Pound to Euro exchange rate turns to Thursday’s interest rate decisions from both the Bank of England (BoE) and the European Central Bank (ECB).

While neither central bank is expected to adjust policy, GBP/EUR could still see volatility as investors assess the tone of the accompanying guidance.

The Pound may draw support if the BoE strikes a more hawkish note. UK inflation rose to 3.4% in December, keeping price growth well above the Bank’s 2% target and potentially making policymakers cautious about signalling further rate cuts in the near term.

However, Sterling could lose traction if the BoE’s updated forecasts point to sluggish growth and a rapid cooling in inflation over the coming months.

On the Euro side, the single currency may face pressure if the ECB reiterates concerns that Euro strength against the US Dollar is exerting a disinflationary drag. Following Wednesday’s softer inflation data, any indication that policymakers are becoming more open to further easing later this year could weigh on EUR.

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TAGS: Pound Euro Forecasts