Pound Euro Exchange Rate Flat as Growth Concerns Offset Rate Hike Bets

Modified: Tuesday, 24 March 2026 21:01 BST - Written by Ben Hughes

STORY LINK Pound Euro Exchange Rate Flat as Growth Concerns Offset Rate Hike Bets

The Pound Euro (GBP/EUR) exchange rate moved within a tight range on Tuesday, as investors digested the latest PMI releases from both the UK and the Eurozone.

At the time of writing, GBP/EUR was trading at €1.1563, having fluctuated modestly since the start of the session.

The Pound traded without a clear trend as investors assessed the UK’s latest PMI readings for March.

The figures provided an early indication of how tensions in the Middle East are feeding into the domestic economy. Business activity in the private sector slowed more sharply than anticipated, with softer demand and a quicker pace of job shedding weighing on overall growth.

At the same time, the surveys highlighted mounting cost pressures, reinforcing speculation that the Bank of England could be forced to consider tightening policy later in the year if inflation picks up again.

While concerns over the economic outlook applied some downward pressure on Sterling, expectations of potential interest rate increases helped to prevent losses.

The Euro saw choppy movement following the release of the Eurozone’s latest PMI figures, which echoed trends seen in the UK data.

The surveys suggested that the ongoing conflict involving the US, Israel and Iran is weighing on growth across the bloc, while simultaneously fuelling inflationary pressures. Input costs surged at their fastest rate in more than three years, driven by rising energy prices and ongoing supply chain disruptions.

This left the single currency caught between competing forces. Concerns over a weakening economic outlook undermined sentiment, while expectations that the European Central Bank may need to adopt a more hawkish stance offered some support.

Short-Term GBP/EUR Forecast: UK CPI and ECB Signals in Focus

The Pound may be influenced by the UK’s latest consumer price index release, although its impact could be limited. February’s inflation figures risk being seen as outdated given the rapidly evolving situation in the Middle East.

Economists expect inflation to remain steady at around 3%. If the data prints in line with forecasts, Sterling may show little reaction. However, any notable deviation could prompt some volatility.

For the Euro, attention may turn to a speech from ECB President Christine Lagarde. Should Lagarde indicate that further policy tightening is on the table, the single currency could find support. On the other hand, any emphasis on the economic risks posed by rising energy costs may weigh on the Euro.

Germany’s latest business climate index will also be in focus. A deterioration in sentiment during March, particularly if linked to the Middle East crisis, could place downward pressure on the Euro.

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