Pound to Euro Firms

Modified: Monday, 23 February 2026 20:01 BST - Written by David Woodsmith

STORY LINK Pound to Euro Firms

The Pound to Euro (GBP/EUR) exchange rate traded without clear direction on Monday as investors assessed Germany’s latest business sentiment figures alongside uncertainty surrounding fresh US trade measures announced by US President Donald Trump.

At the time of writing, GBP/EUR was hovering close to €1.1449, broadly in line with levels recorded at the beginning of the session.

The Euro struggled to establish firm momentum at the start of the week, as encouraging economic data from Germany was offset by renewed global trade concerns.

Germany’s IFO business climate survey exceeded expectations, pointing to improving optimism among companies and raising hopes that economic conditions in the Eurozone’s largest economy may be beginning to stabilise following an extended slowdown.

Despite this improvement, gains in the single currency proved restrained. Ongoing uncertainty linked to Washington’s proposed tariff plans clouded the outlook for export-heavy economies within the bloc, tempering investor enthusiasm for the Euro.

Although largely unchanged against the Euro, the Pound performed more positively against several other major currencies, benefiting from upbeat UK data released late last week.

Recent figures suggested the domestic economy remains relatively resilient, with stronger-than-forecast retail sales and PMI readings helping to underpin confidence. News of a sizeable government budget surplus also provided reassurance ahead of Chancellor Rachel Reeves’ upcoming Spring Statement.

However, Sterling’s advance remained measured as political risks continued to linger. Market participants remain wary ahead of this week’s Greater Manchester by-election, with concerns that a poor showing for Labour could reignite speculation surrounding Prime Minister Keir Starmer’s leadership and inject renewed volatility into UK assets.

GBP/EUR Forecast: BoE Testimony in Focus

Focus now shifts to Bank of England Governor Andrew Bailey, who is scheduled to testify before the Treasury Committee alongside Monetary Policy Committee member Megan Greene. Their comments may prove pivotal for near-term movement in the Pound to Euro exchange rate.

Lawmakers are expected to question policymakers on the future path of interest rates. Any indication that the central bank is becoming more comfortable accelerating monetary easing could weigh on Sterling sentiment.

With the Eurozone economic calendar relatively quiet, the Euro may continue to take its cues from external market developments heading into Tuesday.

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TAGS: Pound Euro Forecasts