Pound-Euro Steady as Markets Eye Possible Middle East De-Escalation

Modified: Tuesday, 10 March 2026 18:01 BST - Written by David Woodsmith

STORY LINK Pound-Euro Steady as Markets Eye Possible Middle East De-Escalation

The Pound Euro (GBP/EUR) exchange rate briefly climbed to a near five-week high on Tuesday, but ultimately traded in a narrow range as markets digested weak German data while weighing hopes that the conflict in Iran could soon draw to a close.

At the time of writing, GBP/EUR was trading at €1.1549, after earlier rising to a session high of €1.1567.

The Euro came under pressure early following the release of disappointing German trade data.

Official figures showed that German exports plunged by 5.9% in January, far exceeding expectations for a modest 0.3% fall. The sharp drop followed Monday’s weak readings for German factory orders and industrial production, deepening concerns about the economic health of the Eurozone’s largest economy.

Despite the gloomy data, the Euro soon regained its footing as energy prices across Europe retreated.

Market sentiment improved after US President Donald Trump suggested that the US-Israel conflict with Iran could conclude ‘very soon’, describing the situation as ‘very complete, pretty much’.

The remarks triggered a broader relief rally that carried into Tuesday’s trading session. For EUR investors, the prospect of a de-escalation helped ease fears that soaring energy costs could trigger a wider crisis for the Eurozone economy.

The Pound traded without a clear trajectory as the absence of fresh UK economic data left Sterling lacking a strong directional driver.

Developments in the Middle East also produced mixed implications for the currency. Elevated energy prices pose a threat to the UK’s already fragile economic recovery and risk increasing pressure on public finances. At the same time, persistently high energy costs could encourage the Bank of England to delay interest rate cuts or reconsider tightening policy.

Against this backdrop, the easing of energy prices did little to significantly influence Sterling.

Even so, the Pound remained close to recent highs against the Euro, as investors continued to believe that the earlier surge in energy costs may still make the Bank of England cautious about reducing borrowing costs too rapidly.

Short-Term GBP/EUR Forecast: ECB Speeches in Focus

Wednesday’s session will feature speeches from two European Central Bank policymakers, Vice-President Luis de Guindos and rate-setter Isabel Schnabel.

If the officials suggest that the recent surge in European energy prices could feed into inflation and potentially require a response from the central bank, the Euro may find some support.

Meanwhile, the conflict in the Middle East is likely to remain a key source of volatility for currency markets. Although there are hopes the war could conclude sooner than initially feared, the situation remains uncertain. Any fresh developments could quickly ripple through markets and drive movement in the GBP/EUR exchange rate.

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TAGS: Pound Euro Forecasts