Pound to Euro Hits 13-Day Low after UK Inflation Disappointment

Modified: Wednesday, 17 June 2026 21:01 BST - Written by David Woodsmith

STORY LINK Pound to Euro Hits 13-Day Low after UK Inflation Disappointment

The Pound Euro (GBP/EUR) exchange rate weakened at the beginning of Wednesday’s session after the UK’s latest consumer price index printed below expectations.

At the time of writing, GBP/EUR was trading at €1.1559, having recovered from a 13-day low of €1.1549.

The Pound (GBP) came under pressure at the start of Wednesday’s European session, following the publication of the UK’s latest inflation data.

May’s consumer price index showed headline inflation remained unchanged at 2.8%, undershooting expectations for an uptick to 3%. Core inflation also printed below forecasts, rising only slightly from 2.5% to 2.6%, rather than climbing to 2.7% as predicted.

The softer-than-expected figures saw investors scale back bets on further Bank of England (BoE) policy tightening, which weighed on Sterling. Although markets still see some possibility of a rate hike later in the year, a growing number of economists now expect the BoE to keep interest rates on hold through 2026 before resuming rate cuts in 2027.

Following the release, GBP/EUR slid to a 13-day low, although the pairing later managed to recover from its weakest levels.

The Euro (EUR) opened Wednesday’s session on firmer footing, but the single currency struggled to extend its gains as the US Dollar (USD) strengthened.

The Euro’s negative correlation with the US Dollar left EUR vulnerable as the safe-haven ‘Greenback’ attracted fresh support. USD demand picked up amid worries that Israel’s continued attacks in Lebanon could threaten the fragile US-Iran peace agreement.

Iran warned that Israel would face ‘a harsh response’ if it did not end its military action, stoking concerns that tensions in the region could flare once again.

As the geopolitical uncertainty pushed investors towards the US Dollar, the Euro’s upside potential was capped.

Near-Term GBP/EUR Forecast: BoE Announcement and By-Election in the Spotlight

Looking ahead, the Pound may face a turbulent session on Thursday, with several domestic catalysts likely to shape Sterling sentiment.

The day begins with the UK’s latest labour market overview, although attention is likely to quickly shift to the Bank of England’s interest rate decision. In the wake of Wednesday’s softer-than-forecast inflation data, GBP investors may be alert to any dovish shift from the central bank.

Should the BoE signal that tighter monetary policy is becoming less likely, the Pound could come under renewed selling pressure.

Political developments may add another layer of uncertainty. Voters in the Greater Manchester constituency of Makerfield are due to take part in a closely watched by-election, with the result potentially carrying significant implications for Prime Minister Keir Starmer’s leadership.

Any signs of political instability could inject additional volatility into Sterling, particularly if markets begin to question the government’s position.

Meanwhile, with notable Eurozone data in short supply, the Euro may be left to trade in response to wider market sentiment and US Dollar dynamics.

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TAGS: Pound Euro Forecasts