Pound-to-Euro Hits One-Year High for Buyers

Modified: Wednesday, 1 July 2026 21:31 BST - Written by Frank Davies

STORY LINK Pound-to-Euro Hits One-Year High for Buyers

The Pound Euro (GBP/EUR) exchange rate advanced to a one-year high on Wednesday after cooler-than-expected Eurozone inflation dented the single currency.

At the time of writing, GBP/EUR was trading at €1.1627, up around 0.2% on the day, after briefly striking a one-year peak of €1.1634.

The Euro (EUR) came under pressure on Wednesday after the latest Eurozone inflation data prompted investors to scale back expectations for another European Central Bank (ECB) interest rate hike.

June’s consumer price index showed headline inflation falling more sharply than anticipated, easing from 3.2% to 2.8%. Markets had expected a softer slowdown to 3%.

Meanwhile, core inflation also undershot forecasts, slipping from 2.6% to 2.4% rather than remaining unchanged.

The weaker inflation figures suggested that price pressures across the bloc are continuing to fade, undermining ECB rate hike bets and dragging on the Euro.

The Pound (GBP) gained ground against the Euro on Wednesday as shifting interest rate expectations encouraged investors to favour Sterling over the single currency.

With markets paring back expectations for further European Central Bank tightening, GBP was able to benefit as traders reassessed the outlook for UK and Eurozone borrowing costs.

Although the Bank of England (BoE) has avoided lifting rates so far this year, investors still see scope for a potential hike over the coming months.

At the same time, UK interest rates remain significantly above those in the Eurozone, giving the Pound a yield advantage as ECB rate hike bets faded.

Near-Term GBP/EUR Forecast: Central Bank Commentary in the Spotlight

Looking ahead, the Eurozone’s latest unemployment rate could provide some direction for the Euro on Thursday. If joblessness remained historically low in May, EUR may find modest support.

However, speeches from ECB officials Piero Cipollone and Frank Elderson may have a stronger impact on the single currency. Should either policymaker signal doubts over the case for additional interest rate hikes following the latest inflation figures, the Euro could stay under pressure.

For the Pound, attention may turn to remarks from Bank of England policymaker Catherine Mann. Any cautious comments from Mann could weigh on Sterling.

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TAGS: Pound Euro Forecasts