Pound to Euro Directionless

Modified: Thursday, 26 March 2026 20:01 BST - Written by Tim Boyer

STORY LINK Pound to Euro Directionless

The Pound Euro (GBP/EUR) exchange rate moved within a narrow range on Thursday, as weak German economic data was balanced out by hawkish rhetoric from a European Central Bank official.

At the time of writing, GBP/EUR was hovering around €1.1555, showing little overall movement from the day’s opening levels.

The Pound struggled to establish a clear trend, with the absence of fresh UK economic data leaving Sterling lacking momentum.

As a result, GBP drifted as investors assessed how the ongoing Middle East crisis might affect the domestic outlook. While elevated energy prices could encourage the Bank of England to maintain a more hawkish stance, they also risk undermining the UK’s already fragile growth prospects.

The Euro experienced choppy trading, caught between weak German data and more hawkish signals from the European Central Bank.

Fresh figures from Germany revealed a deterioration in consumer confidence ahead of April, with sentiment falling to its lowest level since March 2024. Households in the Eurozone’s largest economy appear increasingly concerned that rising energy prices could squeeze incomes and hinder the broader recovery.

At the same time, losses in the single currency were tempered by comments from ECB policymaker Joachim Nagel, who suggested interest rates could be raised as soon as April if inflationary pressures intensify. His remarks reinforced a similar tone struck by ECB President Christine Lagarde a day earlier.

With bearish data and hawkish rhetoric pulling in opposite directions, the Euro ultimately lacked a clear trajectory.

Short-Term GBP/EUR Forecast: UK Retail Sales in Focus

Friday’s UK retail sales figures are likely to be the main focus, with the data posing a potential downside risk for the Pound. Economists expect sales volumes to have fallen by 0.8% in February, and such a notable decline in consumer spending may reignite concerns over the resilience of the UK economy.

For the Euro, the data calendar is relatively quiet at the end of the week, although additional commentary from European Central Bank officials could still move the single currency. Any further hawkish signals may lend support.

The Euro’s inverse relationship with the US Dollar could remain a key driver, with fluctuations in the US Dollar potentially feeding through into movement and adding an extra layer of volatility to the pairing.

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TAGS: Pound Euro Forecasts