GBP/EUR exchange rate week review: pound slips below 1.15 level following BoE rate decision
15/09/2025 to 19/09/2025: The pound slipped below 1.15 against the euro after the Bank of England left interest rates on hold and hinted at a possible cut in November.
Monday
The pound euro (GBP/EUR) exchange rate advanced to around 1.158 amid expectations of monetary policy divergence between the Bank of England (BoE) and the European Central Bank (ECB). If, as expected, the UK central bank maintains its current hawkish stance through the rest of the year, the pound will find support.
The euro was dented by ratings agency Fitch’s downgrade of France’s credit outlook, but its downside was limited by its inverse correlation with a faltering dollar.
Tuesday
The pound slid to two-week lows near 1.15 after the euro was supercharged by an unexpected improvement in Germany’s ZEW economic sentiment index. The single currency was also supported by broad dollar weakness.
The UK’s latest employment figures couldn’t reverse the pound’s fortunes. Signs of a mild cooling in Britain’s labour market failed to alter expectations that the BoE would hold interest rates steady later in the week.
Wednesday
The pound firmed slightly against the euro following the release of the UK’s consumer price index for August. Headline inflation held steady at 3.8%, in line with forecasts and nearly twice the BoE’s 2% target, strengthening expectations that the central bank would keep rates unchanged.
Meanwhile, the euro softened on profit-taking and a small downward revision to the Eurozone’s final August inflation reading.
Thursday
The pound slid below the 1.15 level against the euro after the BoE left interest rates unchanged but left the door open to a cut in November. Governor Andrew Bailey signalled the central bank’s current rate-cutting cycle is only on pause.
The euro was solid as markets digested comments from ECB Vice President Luis de Guindos. The policymaker warned that a ‘very cautious’ stance on monetary policy is needed amid heightened uncertainty across the Eurozone.
Friday
The pound continued to soften after UK retail sales surpassed expectations, but UK government borrowing – the difference between public spending and tax income – in August hit the highest level for the month in five years.
With Eurozone data in short supply, the single currency struggled to find a clear direction.
The pound euro exchange rate ended the week at around 1.145.
Looking ahead
Flash manufacturing and services survey data is scheduled for release from the Eurozone and the UK on Tuesday, with downbeat forecasts set to weigh on the pound euro rate.
Forecasts suggest that Eurozone business activity may slow in April due to tariff-related economic uncertainty, with the manufacturing (PMI) expected to drop to 47.4. Meanwhile, consensus projections point to further growth in Eurozone services activity in April, with the PMI forecast to print at 50.4.
The UK manufacturing PMI fell to 44.9 in March, extending its downturn for a sixth consecutive month and marking the lowest reading in 17 months. April’s index is forecast to decline further to 44.0.
The UK services sector index was revised up in March to its highest reading since August 2024. However, constrained household budgets and geopolitical tensions are expected to continue weighing on business sentiment, leading economists to project a dip in the services PMI to 51.4 in April.