Pound-Euro Slips as ECB Rate Hike Bets Support EUR Rates

Modified: Thursday, 28 May 2026 20:01 BST - Written by Frank Davies

STORY LINK Pound-Euro Slips as ECB Rate Hike Bets Support EUR Rates

The Pound Euro (GBP/EUR) exchange rate remained on the back foot on Thursday, as Sterling struggled to hold its ground against the single currency.

At the time of writing, GBP/EUR was trading at €1.1530, having earlier slipped to a nine-day low of €1.1529.

The Euro (EUR) found support on Thursday after the latest Eurozone data painted a slightly brighter picture of the bloc’s economic outlook.

May’s economic sentiment index unexpectedly rose from 93.2 to 93.5, defying forecasts for a drop to 92.8. The surprise improvement helped ease concerns over the Eurozone’s near-term resilience, offering the common currency a modest boost.

The Euro also drew support from hawkish European Central Bank (ECB) expectations. Markets are now pricing in at least two interest rate hikes this year, alongside roughly even odds of a third, as policymakers look to contain inflationary pressures linked to the US-Iran war and the resulting energy shock.

The Pound (GBP) struggled to find momentum on Thursday, as an absence of notable UK economic releases left Sterling with little fresh support.

Adding to the downbeat mood, the Office for National Statistics (ONS) reported a rise in the number of young people not in employment, education or training.

The figure increased by 55,000 in the first quarter of 2026, climbing to more than one million. This raised concerns over underlying weakness in the UK labour market, keeping pressure on the Pound.

Near-Term GBP/EUR Forecast: Bailey Speech and German Inflation in Focus

Looking ahead, a speech from Bank of England (BoE) Governor Andrew Bailey could offer GBP investors fresh direction on Friday morning.

Recent Bank of England interest rate hike expectations have softened, following a run of weaker UK economic releases and hopes that a Middle East peace deal could ease inflationary pressures. Should Bailey sound cautious on the case for tighter monetary policy, Sterling may struggle.

For the Euro, attention will turn to Germany’s preliminary consumer price index for May. Markets expect headline inflation in the Eurozone’s largest economy to have held steady this month, which could weigh on the Euro if the figures temper ECB rate hike bets.

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TAGS: Pound Euro Forecasts