Pound-to-Euro Rate Steady after ECB Leaves Rates Unchanged

Modified: Friday, 24 July 2026 06:31 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Rate Steady after ECB Leaves Rates Unchanged

The Pound to Euro (GBP/EUR) exchange rate was confined to a narrow range on Thursday as investors reacted to the European Central Bank’s (ECB) latest policy announcement.

At the time of writing, GBP/EUR was trading at around €1.1722, virtually unchanged from Thursday’s opening levels.

The Euro (EUR) struggled to find momentum after the European Central Bank concluded its latest policy meeting with interest rates left unchanged at 2.25%, in line with market expectations.

With the decision already priced in, investors instead focused on ECB President Christine Lagarde’s comments following the announcement.

Lagarde warned that higher energy prices are likely to keep inflation above the bank’s target well into the first half of 2027, suggesting policymakers may still need to maintain a restrictive monetary policy stance.

However, she also acknowledged that the outlook for economic growth remains fragile, tempering expectations for additional rate increases and leaving the single currency without a clear catalyst for gains, particularly as a stronger US Dollar (USD) limited demand.

The Pound (GBP) traded with little conviction on Thursday as UK government borrowing costs continued to move higher.

The yield on the benchmark 10-year gilt climbed above 5%, reaching its highest level in more than two months.

Although the rise partly reflected higher global energy prices following renewed conflict in the Gulf, investors also continued to assess the fiscal implications of measures announced by Prime Minister Andy Burnham.

Since taking office earlier in the week, Burnham has unveiled a series of tax cuts and support measures, including the removal of VAT on household electricity bills, lower business rates for hospitality firms and continued limits on bus fares.

While the policies have been broadly welcomed by businesses and consumers, markets remain cautious over how the government intends to finance the package without straying from Labour's fiscal rules.

Near-Term GBP/EUR Forecast: PMI Data Could Spark Fresh Volatility

Attention now turns to Friday's economic calendar, with the latest UK and Eurozone PMI releases expected to provide the next major driver for the Pound to Euro (GBP/EUR) exchange rate.

The Euro could find support if preliminary July surveys indicate business activity across the bloc has strengthened.

For Sterling, however, the risks appear more balanced. Another contraction in the UK's dominant services sector would likely weigh on the Pound, while the latest retail sales figures could also influence sentiment if consumer spending weakened again last month

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TAGS: Pound Euro Forecasts