Pound to Euro Rate Softens on Broad US Dollar Selloff

Modified: Monday, 15 June 2026 20:31 BST - Written by James Fuller

STORY LINK Pound to Euro Rate Softens on Broad US Dollar Selloff

The Pound to Euro (GBP/EUR) exchange rate edged lower at the start of the week as a broad retreat in the US Dollar (USD) helped underpin demand for the single currency.

The GBP/EUR exchange rate traded at roughly €1.1563 at the time of writing, down 0.2% from Monday’s opening levels.

The Euro (EUR) moved higher on Monday as investors rotated out of the US Dollar following reports that Washington and Tehran had agreed a framework aimed at ending their recent conflict.

Details of the proposed agreement reportedly include measures to restore shipping through the Strait of Hormuz, ease restrictions on Iran and establish a pathway towards a broader peace settlement. The prospect of reduced geopolitical risk sparked a rally in risk assets and prompted traders to unwind defensive positions accumulated during the crisis.

A sharp drop in demand for the 'Greenback' proved particularly supportive for the Euro given the currencies’ well-established inverse relationship.

Further backing for the single currency came from expectations that the European Central Bank (ECB) may maintain a relatively restrictive policy stance. Following its recent rate increase, markets continue to speculate that policymakers could deliver additional tightening before the end of the year.

The Pound (GBP) struggled to generate meaningful momentum as investors turned their attention to the upcoming Makerfield by-election.

Political uncertainty remained a key consideration for Sterling traders, with the contest being viewed as an important test for the Labour government. A strong performance by Andy Burnham could increase speculation about a future challenge to Prime Minister Keir Starmer's leadership, encouraging investors to remain cautious ahead of the vote.

This political backdrop limited the benefit of falling UK borrowing costs, even as improved market sentiment helped drive gilt yields lower following news of progress towards a US-Iran peace agreement.

Near-Term GBP/EUR Forecast: German Sentiment Data in Focus

The Pound to Euro exchange rate could find support on Tuesday if Germany’s latest economic sentiment figures disappoint.

Analysts expect June’s ZEW survey to show confidence continuing to recover from April’s multi-year lows. However, sentiment is still forecast to remain subdued overall, which could curb demand for the Euro if the rebound proves weaker than anticipated.

For Sterling, movement may remain limited in the near term as traders await two major domestic events. Alongside the Makerfield by-election, investors are also preparing for the Bank of England (BoE) interest rate decision, both of which could shape the Pound’s direction later in the week.

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TAGS: Pound Euro Forecasts