GBP/EUR exchange rate week review: pound hits two-year low against euro
28/07/2025 to 01/08/2025: The pound recovered from a two-year low against the euro as doubts over the EU-US trade deal surfaced.
Monday
The pound euro (GBP/EUR) exchange rate briefly hit a two-year low around 1.141 in the wake of news surrounding a newly signed EU-US trade deal, before rebounding above the 1.15 benchmark amid euro weakness.
The euro opened the week on the front foot after confirmation that the EU had reached a trade agreement with the US. Despite this initial uplift, the single currency struggled to sustain momentum as the fine print of the deal was placed under the microscope. Analysts observed that, despite avoiding enormous tariffs on most European goods entering the US, exporters are exposed to higher trade barriers than before.
Tuesday
The pound maintained its path higher, climbing into the 1.15 mid-range, as doubts over the EU-US trade deal intensified, denting the euro. Several EU officials expressed concerns about the deal, stating that it provides greater advantages to the US and maintains high tariffs on many EU exports.
Wednesday
The pound broke through the 1.16 barrier against a backdrop of ongoing euro weakness.
GDP data showing Eurozone growth almost stalled between April and June, expanding just 0.1%, applied downward pressure on the single currency. The print narrowly exceeded expectations but increased pressure on the European Central Bank (ECB) to support the bloc’s weak economy.
Thursday
The pound dropped into the 1.15 mid-range versus the euro as recent policy setbacks and lacklustre economic numbers clouded the growth outlook for the third and fourth quarters.
Meanwhile, investors flocked back to the single currency following the release of better-than-expected unemployment figures from the Eurozone and stronger-than-forecast inflation data from Germany.
Friday
The pound tumbled around 1% against the euro amid ongoing concerns over the UK economic outlook.
The euro firmed despite German inflation cooling a fraction under the ECB’s 2% target for the first time in 10 months. Eurozone inflation remained at the ECB’s target rate, bucking expectations of a slight fall to 1.9% as a stronger single currency helped keep prices in check. July’s figure marked the second consecutive month that price rises remained at 2%.
Looking ahead
The Bank of England (BoE) is expected to reduce interest rates on Thursday, but the likelihood of a fresh three-way split among policymakers highlights the conflicting risks posed by rising inflation and a weakening job market to the UK economy.