GBP/EUR Outlook: Political Calm Helps Pound Extend Gains Against the Euro

Modified: Wednesday, 8 July 2026 16:01 BST - Written by John Cameron

STORY LINK GBP/EUR Outlook: Political Calm Helps Pound Extend Gains Against the Euro

The Pound Euro (GBP/EUR) exchange rate briefly climbed to a fresh one-year high on Tuesday, before quickly trimming its gains.

At the time of writing, GBP/EUR was trading at €1.1704, having earlier peaked at €1.1715.

The Pound (GBP) remained supported on Tuesday, despite a lack of notable UK economic releases leaving Sterling with little fresh domestic impetus.

Recent gains in the Pound have been driven by easing political uncertainty in the UK. After Prime Minister Keir Starmer stepped down, a number of would-be rivals lined up behind leadership frontrunner Andy Burnham.

This has helped calm investor nerves, as the prospect of a prolonged and divisive leadership contest appears to have receded. With Burnham widely expected to take over at Number 10 without a serious challenge – while maintaining the government’s current fiscal rules – Sterling has continued to find support.

Meanwhile, the Euro (EUR) struggled to gain traction on Tuesday, even after Germany published stronger-than-forecast industrial data.

Industrial production in the Eurozone’s largest economy picked up in May, rising from 0.2% to 0.9%. Economists had expected output to hold steady at 0.2%.

The release may have helped EUR recover from the one-year low it struck against GBP, but the single currency remained under broader pressure.

This was largely due to the Euro’s strong negative trading relationship with the US Dollar (USD), with renewed demand for the ‘Greenback’ keeping EUR on the defensive.

Near-Term GBP/EUR Forecast: Quiet Data Calendar to Curb Movement?

Looking ahead, Wednesday’s session brings little in the way of high-impact economic data from either the UK or the Eurozone, potentially leaving the Pound and Euro to move in response to broader market sentiment.

Sterling may remain underpinned as investors continue to unwind the political risk premium previously attached to the Pound. However, with Labour leadership nominations set to open on Thursday, GBP’s upside could be limited.

Meanwhile, the Euro may take its cues from the US Dollar, due to the two currencies’ strong negative correlation. As a result, any notable movement in the ‘Greenback’ could influence EUR exchange rates.

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TAGS: Pound Euro Forecasts