Pound-to-Euro Rate Slips after Mixed UK Inflation Data

Modified: Wednesday, 22 July 2026 20:31 BST - Written by James Fuller

STORY LINK Pound-to-Euro Rate Slips after Mixed UK Inflation Data

The Pound Euro (GBP/EUR) exchange rate was subdued on Wednesday after the UK's latest consumer price index offered little fresh direction for Sterling.

At the time of writing, the GBP/EUR exchange rate was trading at around €1.1714, down approximately 0.1% on the day.

The Pound (GBP) traded in a narrow range on Wednesday after the UK's latest inflation release failed to provide a decisive catalyst for Sterling.

June's headline CPI slowed from 2.8% to 2.6%, falling below expectations of a 2.7% reading. At the same time, core inflation surprised by remaining unchanged at 2.6%, instead of easing to the forecast 2.5%.

With the data sending mixed signals, Bank of England (BoE) interest rate expectations remained largely unchanged, leaving the Pound without a clear sense of direction.

At the same time, Sterling was also affected by uncertainty over how new Prime Minister Andy Burnham intends to pay for a number of his policy commitments.

After taking office on Monday, Burnham swiftly unveiled a series of cost-of-living support measures. However, financial markets continue to question how these proposals will be funded.

The Euro (EUR) also struggled to find momentum on Wednesday as attention turned to Thursday's European Central Bank (ECB) interest rate announcement, while the Eurozone economic calendar remained quiet.

With no notable data releases to drive movement and the ECB policy decision fast approaching, traders largely stayed on the sidelines, leaving the single currency rangebound.

Near-Term GBP/EUR Forecast: Hawkish ECB Could Boost Euro

Attention turns to the European Central Bank's latest policy announcement on Thursday, which is expected to be the main driver of movement for the GBP/EUR exchange rate.

While the ECB is widely forecast to leave interest rates unchanged, investors will be paying close attention to the bank's accompanying guidance for clues on the future path of monetary policy.

Should policymakers signal that further rate increases remain on the table, particularly following the recent rise in energy prices, the Euro may attract fresh support.

For the Pound, attention will fall on two Confederation of British Industry (CBI) reports, including the third-quarter business optimism index and July's industrial trends orders survey. Stronger readings from both could provide Sterling with a modest lift.

That said, UK political developments may remain the dominant influence. If concerns persist over how Prime Minister Andy Burnham plans to finance his new cost-of-living measures, the Pound could remain on the defensive.

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TAGS: Pound Euro Forecasts