Pound to Euro: One-Week Low as German Confidence Jumps

Modified: Thursday, 24 September 2026 20:01 BST - Written by David Woodsmith

STORY LINK Pound to Euro: One-Week Low as German Confidence Jumps

The Pound to Euro (GBP/EUR) exchange rate remained close to a one-week low on Thursday, with the pairing coming under pressure as an unexpectedly strong improvement in German business confidence boosted demand for the single currency.

At the time of writing, GBP/EUR was trading at around €1.1627, edging slightly lower compared with the start of Thursday’s session.

The Euro (EUR) found some support on Thursday morning after Germany’s latest IFO business climate index pointed to a notable improvement in corporate sentiment.

September’s reading came in ahead of expectations, indicating that confidence among German businesses has climbed to its highest level since May 2023.

The improvement was notable given the renewed pressure being exerted by elevated energy prices.

However, the single currency struggled to build significant momentum, partly reflecting continued strength in the US Dollar (USD).

The ‘Greenback’ remained well supported by growing expectations that the Federal Reserve could raise interest rates again, limiting the Euro’s ability to make further gains.

The Pound (GBP) was broadly stable on Thursday as concerns surrounding the UK economy were counterbalanced by increasingly hawkish signals from Bank of England (BoE) policymaker Clare Lombardelli.

Speaking at the Sixth Biennial Conference on Macroeconomic Policy in Warsaw, Lombardelli warned that persistent inflationary pressures resulting from the recent energy price shock could require monetary policy to become tighter.

Her comments were particularly notable given that Lombardelli was among the six Monetary Policy Committee (MPC) members who backed keeping interest rates unchanged at last week’s meeting.

The remarks therefore fuelled speculation that the BoE could be preparing to resume raising rates as soon as November.

Near-Term GBP/EUR Forecast: German Consumer Confidence in Focus

Looking towards the end of the week, the Pound Euro exchange rate could find some upward momentum if Germany’s latest consumer confidence figures disappoint.

Consumer sentiment heading into October is expected to have weakened following September’s modest improvement.

Rising energy costs, combined with the possibility of higher interest rates, could leave households increasingly cautious about their economic prospects.

With the UK economic calendar largely empty, meanwhile, Sterling is likely to take its cues from broader market sentiment.

A more risk-averse tone could weigh on the Pound, while further evidence of a hawkish BoE outlook may provide some support.

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TAGS: Pound Euro Forecasts