GBP/EUR exchange rate week review: pound dips to month and a half low against the euro
10/03/2025 to 14/03/2025: The pound slipped to a multi-week low versus the euro amid the single currency's negative trading relationship with a downbeat dollar.
Monday
The pound euro (GBP/EUR) exchange rate drifted below the €1.19 benchmark and hovered at one-and-a-half-month lows in the absence of macroeconomic data from the UK economy.
Pound sentiment was dented by uncertainty over whether the UK will side with the US or the EU and its allies in the event of a transatlantic trade war.
Investors in the euro digested mixed data from Germany.
Exports from the Eurozone’s largest economy fell by 2.5% in January compared with the previous month, missing a forecast 0.5% increase. Imports rose by 1.2% in the same period.
Industrial production rose by 2% compared with February, outstripping a predicted 1.5% rise.
Tuesday
The pound euro exchange rate slipped to a month and a half low at around €1.183 after the single currency was bolstered by its strong negative correlation with an embattled dollar. These tailwinds were strengthened by a risk-off market mood.
Despite expectations that the UK will be untroubled by US trade tariffs and retaliatory measures by the EU, the pound was unable to gain ground.
Wednesday
The pound jumped above the €1.19 benchmark after euro investors were spooked by transatlantic trade tensions, with the EU vowing to retaliate against US tariffs. Optimism surrounding Ukraine ceasefire talks helped to cushion the safer euro’s losses.
Macroeconomic data remained thin on the ground on both sides.
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Thursday
The pound edged higher versus the euro after the single currency was pressured by Donald Trump’s threat of a 200% tariff on EU alcohol exports in response to the bloc’s retaliation against the US President’s recent action.
However, the safer euro was able to limit its losses against the risk-sensitive pound amid a gloomy global market mood.
Friday
The pound dropped more than half a percent after GDP data showed the UK economy unexpectedly shrank by 0.1% in January. Economists had expected the country’s GDP to grow by 0.1%.
Meanwhile, the euro was bolstered by news that German politicians achieved a breakthrough in agreeing to an unprecedented spending package proposed by incoming Chancellor Freidrich Merz.
The pound euro exchange rate ended the week at around €1.189.
Looking ahead
With inflation news worsening, economists expect the Bank of England to keep its base rate at 4.5% when it announces its next policy decision on Thursday – a hawkish move that could lend the pound support.