GBP/EUR exchange rate week review: pound traded in narrow range versus euro
16/03/2026 to 20/03/2026: The pound traded in a narrow range against the euro, caught between a resilient Bank of England rate hold and mounting headwinds from weak UK wage growth, slowing GDP, and rising global energy prices driven by Middle East tensions.
Monday
The pound euro (GBP/EUR) exchange rate drifted lower amid lingering concerns over the UK’s economic outlook following a downbeat GDP print the previous week. The UK currency faced further headwinds after projections from Goldman Sachs suggested the Bank of England (BoE) could still vote through two interest rate cuts this year.
The single currency ticked higher, due to its inverse relationship with a softening dollar. Declining energy prices also helped to inject strength.
Tuesday
In the absence of fresh economic indicators, the pound traversed the 1.15 range.
The euro traded in a mixed range, showing resilience following the release of downbeat German data, helped by further dollar weakness. The latest ZEW economic sentiment index nosedived from 58.3 to -0.5 this month, its third-largest fall on record, as the Middle East crisis dented confidence in the Eurozone’s largest economy.
Wednesday
The pound remained stuck in a narrow range amid an ongoing lack of data from the UK economy. Investors also held back from the UK currency ahead of the BoE’s interest rate decision.
The euro found some strength following the release of the Eurozone’s final consumer price index for February. While the figures were consistent with estimates, the increase from 1.7% to 1.9% demonstrated that price pressures were intensifying even before the recent escalation in energy costs.
Thursday
The pound euro exchange rate remained rangebound after both the BoE and the European Central Bank (ECB) announced their latest policy decisions.
The UK currency ticked higher after the BoE voted to leave interest rates on hold at 3.75% – an expected outcome due to increased UK inflation risks from rising global energy prices.
In its accompanying statement, the UK central bank warned that the situation is a fresh economic shock and reiterated that it’s ready to act if inflation moves significantly from its 2% target. These remarks, alongside inflated energy prices, prompted some investors to ramp up their expectations for further policy tightening this year.
The pound failed to cling onto its gains after data showed UK pay grew at its slowest rate in more than five years. Earnings, excluding bonuses, increased 3.8% annually from November to January, a decrease from the previous reading of 4.1%. The unemployment rate remained unchanged at a near five-year high of 5.2%.
The ECB also chose to leave interest rates unchanged, highlighting the uncertainty and inflationary risks facing the Eurozone economy. This led it to predict that prices will rise by an average of 2.6% throughout the year.
Friday
The pound softened against the euro amid risk-off market conditions that favoured the safer single currency. This was prompted by a jump in oil prices amid escalating tensions in the Middle East, which increased inflation fears globally. Investor profit-taking following the BoE-driven rally the previous day added downward pressure.
The pound euro exchange rate ended the week around 1.158.
Looking ahead
The UK consumer prices index (CPI) reading for February hits the headlines on Wednesday. The figures cover the period before the start of the Middle East conflict, which has sent oil prices soaring and fuelled fears of a resurgence in pricing pressures.