GBP/EUR exchange rate week review: pound hits 7-month low versus euro
31/03/2025 to 04/04/2025: The pound sunk to its lowest level against the euro since September after after China said it would impose additional tariffs of 34% on all US goods, sparking a selloff in risky assets.
Monday
The pound euro (GBP/EUR) exchange rate remained rangebound amid a UK economic data lull and ongoing UK-US trade tariff negotiations.
Preliminary data revealed that German inflation softened last month, sapping demand for the single currency. The slowdown in price growth supports speculation that the European Central Bank (ECB) could vote through another interest rate cut in April.
Tuesday
The pound continued to traverse the 1.19 mid-range versus the euro as a last-minute deal for the UK to avoid US trade tariffs collapsed. News the UK would not be exempt dented the pound.
The euro was undermined by cooler-than-forecast Eurozone inflation figures that fuelled ECB interest rate cut bets. The bloc’s consumer price index for March showed headline inflation eased from 2.3% to 2.2% rather than holding steady, and core inflation cooled from 2.6% to 2.4% versus the forecast 2.5%.
Wednesday
The pound initially drifted lower against the euro as it became clear that the UK would be hit by Donald Trump’s sweeping tariff plans. However, the UK currency jumped just above the 1.20 benchmark after the US President announced that the UK would only face a 10% tariff, compared to a hefty 20% for the EU.
The euro faced selling pressure amid fears that EU retaliation to Trump’s tariffs could spark a transatlantic trade war. The single currency’s downside was cushioned by its negative correlation with the dollar, which nosedived following confirmation of the sweeping and immediate import taxes.
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Thursday
The pound sunk into the 1.185 mid-range versus the euro after the UK’s services PMI for March missed forecasts. The finalised reading showed slower growth in the powerhouse services sector than estimated, pointing to stagnation in the UK economy during the first three months of the year.
Meanwhile, the euro was supported by a tumbling dollar and an upward revision to the Eurozone’s finalised March PMIs.
Friday
The pound hit a seven-month low versus the euro close to 1.1750 as China's retaliatory tariffs against the US deepened a selloff in risky assets.
February’s German factory orders print revealed flat growth, falling short of expectations and capping further gains for the safer single currency.
Looking ahead
The UK and EU have indicated they’re prepared to retaliate against Trump’s tariffs, leaving investors poised for any announcements. If they respond this week, the pound and euro will likely soften.