Pound to Euro Firms

Modified: Thursday, 21 May 2026 20:31 BST - Written by Minesh Chaudhari

STORY LINK Pound to Euro Firms

The Pound to Euro (GBP/EUR) exchange rate moved sideways on Thursday as investors reacted to underwhelming PMI data from both the UK and the Eurozone.

At the time of writing, the GBP/EUR exchange rate was trading at approximately €1.1559, little changed from the opening levels seen earlier in the session.

The Pound (GBP) struggled for traction on Thursday after the UK’s latest preliminary PMI figures pointed to a deterioration in private sector activity.

May’s flash surveys revealed that activity within the UK services sector unexpectedly slipped into contraction territory for the first time in more than a year.

Economists warned that a combination of rising energy costs and ongoing political uncertainty is beginning to take a heavier toll on confidence among both businesses and consumers.

Analysts also noted that the latest PMI readings are consistent with a potential quarterly contraction in UK GDP, raising concerns that economic conditions may worsen further over the months ahead.

The Euro (EUR) also lacked momentum on Thursday after fresh PMI data showed the downturn across the Eurozone economy deepened in May.

The bloc’s composite PMI dropped from 48.8 to 47.5, marking its weakest reading in more than two and a half years and remaining firmly below the 50 threshold associated with growth.

Much of the deterioration came from the services sector, where the index slid to 46.4, its lowest level in over five years, amid mounting cost pressures on firms.

The disappointing figures weighed on EUR sentiment as investors speculated they may discourage policymakers at the European Central Bank (ECB) from supporting further interest rate increases at the bank’s upcoming meeting.

Near-Term GBP/EUR Forecast: Weak Retail Sales to Drag on Sterling?

Looking ahead to Friday’s session, the Pound to Euro exchange rate may come under additional pressure with the release of the UK’s latest retail sales figures.

Markets expect sales volumes to have fallen by 0.6% last month, with another decline in consumer spending potentially reinforcing doubts over whether the Bank of England (BoE) will raise interest rates next month.

At the same time, Germany’s latest IFO business climate survey may also influence movement in the Euro, with economists forecasting another deterioration in business confidence during May.

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TAGS: Pound Euro Forecasts