Pound Sterling Climbs against Euro as Rate Hike Bets Hold Firm

Modified: Wednesday, 22 April 2026 20:36 BST - Written by Frank Davies

STORY LINK Pound Sterling Climbs against Euro as Rate Hike Bets Hold Firm

The Pound Euro (GBP/EUR) exchange rate edged higher on Wednesday, climbing to its strongest level in around three weeks, following the UK’s latest inflation release.

At the time of writing, GBP/EUR was trading near €1.1513, marking a modest daily gain while hovering at its highest point since late March.

The Pound (GBP) found some footing on Wednesday after the release of the UK’s most recent inflation data.

Figures showed headline consumer price growth ticking up from 3% to 3.3% in March, in line with forecasts, while core inflation came in slightly softer than expected, easing from 3.2% to 3.1%.

Looking beneath the surface, inflation within the services sector – a key metric for the Bank of England (BoE) – climbed from 4.3% to 4.5%.

Although the data did little to significantly shift expectations for BoE policy, it was enough to preserve speculation that interest rates could still rise later in the year, lending the Pound some limited support.

The Euro (EUR) came under pressure against the Pound on Wednesday morning, with a lack of fresh Eurozone data leaving the single currency without firm support.

While a pullback in the US Dollar (USD) – to which the Euro typically shows an inverse relationship – helped to cushion losses, this was not enough to fully offset the currency’s softer footing.

As a result, EUR struggled to maintain its position, slipping against its stronger counterparts.

Short-Term GBP/EUR Forecast: PMI Data in Focus

Looking ahead, Thursday’s preliminary PMI releases from both the Eurozone and the UK could prompt some volatility in the GBP/EUR exchange rate.

The session begins with the Eurozone figures, where overall business activity is forecast to slow, edging close to stagnation at 50.2 in April as the impact of the US-Iran conflict weighs on the bloc’s economy. Such a reading may place some downward pressure on the Euro.

Attention will then shift to the UK’s data, which is also expected to reflect the drag from geopolitical tensions. The crucial services PMI is predicted to hover at 50, indicating stalled growth. If confirmed, this could limit demand for Sterling.

However, markets will also be watching for any signs of persistent inflationary pressures, particularly within the services sector. Evidence of rising input costs may help to cushion both the Pound and the Euro, potentially tempering any losses.

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TAGS: Pound Euro Forecasts