Pound to Euro Struggles amid Westminster Tensions

Modified: Monday, 11 May 2026 20:31 BST - Written by Frank Davies

STORY LINK Pound to Euro Struggles amid Westminster Tensions

The Pound Euro (GBP/EUR) exchange rate struggled to find momentum at the start of the week, briefly falling before trimming some of its earlier losses, as political uncertainty in the UK unsettled Sterling sentiment.

At the time of writing, GBP/EUR was trading at €1.1553, slightly lower on the day but above its earlier trough of around €1.1540.

The Pound (GBP) opened the week on the back foot as fresh political unease in Westminster dented confidence in Sterling.

While the Pound had remained relatively resilient at the end of last week as investors assessed the UK local election results, sentiment soured as speculation surrounding Prime Minister Keir Starmer’s leadership intensified.

Labour MP Catherine West called on Starmer’s cabinet to oust him, reportedly warning that she would move to trigger a leadership contest if ministers did not intervene.

The threat of renewed political instability lifted UK gilt yields and added pressure to GBP exchange rates.

The Euro (EUR) was unable to make meaningful gains against the Pound on Monday morning, with a sparse Eurozone data calendar leaving the single currency without a clear domestic catalyst.

This left the Euro vulnerable to movement in the US Dollar (USD), given the pair’s typically strong inverse relationship.

As the ‘Greenback’ drew support from lingering US-Iran tensions, EUR came under pressure, limiting its upside against Sterling.

Near-Term GBP/EUR Forecast: German Data to Weigh On the Euro?

Looking ahead, Germany’s latest ZEW economic sentiment index could drive movement in the Euro on Tuesday.

Economists expect confidence in the Eurozone’s largest economy to weaken again in May, potentially falling to its lowest level since December 2022. Should the index print in line with forecasts, the common currency could come under renewed pressure.

For the Pound, UK political developments are likely to remain a key focus. Any sign that Prime Minister Keir Starmer could face a leadership challenge may deepen investor unease and drag on Sterling.

However, if Starmer successfully weathers the latest pressure on his leadership, a degree of political calm could help support GBP.

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TAGS: Pound Euro Forecasts