Pound-to-Euro Rate Slides as UK Politics Unsettle Markets

Modified: Monday, 9 February 2026 20:01 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Rate Slides as UK Politics Unsettle Markets

The Pound to Euro exchange rate (GBP/EUR) opened the week on the back foot, with mounting political uncertainty in the UK weighing on demand for Sterling.

At the time of writing, GBP/EUR was trading close to €1.1471, marking a decline of around 0.4% from Monday’s opening levels and pushing the pair back towards recent lows.

Sterling came under pressure after fresh signs of instability within the UK government unsettled investors.

Market confidence was dented over the weekend following the resignation of Prime Minister Keir Starmer’s chief of staff, Morgan McSweeney. The departure has intensified scrutiny of Starmer’s authority and raised concerns that he is becoming increasingly exposed politically.

McSweeney’s exit also comes amid growing criticism over the appointment of Peter Mandelson as the UK’s ambassador to Washington, particularly following renewed attention on Mandelson’s past associations with Jeffrey Epstein.

Fears that the Prime Minister is losing key support within his inner circle have fuelled speculation over divisions inside the Labour Party and whether Starmer’s leadership could face a challenge, adding another layer of uncertainty for Pound investors.

In contrast, the Euro edged higher at the start of the week, finding modest support from broader market dynamics.

The single currency benefitted in part from its inverse relationship with a softer US Dollar, as the Greenback came under pressure amid a strengthening Japanese Yen and lingering doubts over the resilience of the US labour market.

EUR sentiment was also lifted by the Eurozone’s latest Sentix investor confidence survey, which climbed to its highest level in seven months, offering reassurance that optimism across the bloc is improving.

GBP/EUR Forecast: Political Risks in the UK Dominate Near-Term Outlook

Looking ahead, with little in the way of high-impact UK or Eurozone economic data scheduled, political developments in the UK are likely to remain the dominant driver of movement in the Pound to Euro exchange rate.

Sterling therefore remains vulnerable to further downside if signs of waning support for Prime Minister Starmer continue to emerge or if internal Labour divisions deepen.

Meanwhile, the Euro may continue to take its cues from wider market sentiment. Should the US Dollar remain under pressure, the single currency could extend its recent gains, adding further headwinds for GBP/EUR.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts