GBP/EUR exchange rate week review: pound traverses 1.17 range ahead of BoE rate decision
28/04/2025 to 02/05/2025: The pound was rangebound against the single currency amid mixed economic data from both sides.
Monday
The pound euro (GBP/EUR) exchange rate started the week on the front foot thanks to the UK’s perceived resilience to mounting trade tensions.
The UK currency received further support from the Confederation of British Industry’s (CBI) distributive trades survey for April, which exceeded expectations to print at a six-month high – although it still indicated a dip in sales volumes.
Tuesday
The pound traded sideways through the 1.17 mid-range versus the euro as an absence of UK data focused investor attention on the prospect of a Bank of England (BoE) interest rate cut in May. Markets widely expect the central bank to lower borrowing costs by 25bps at its next policy meeting, limiting demand for the UK currency.
The safer single currency firmed slightly amid a cautious market mood. Its upside was checked, however, by an underwhelming Eurozone sentiment index, which showed consumer morale plummeted to its lowest level since November 2023.
Wednesday
The pound euro exchange rate stumbled on renewed doubts over a UK-US trade agreement after Donald Trump reportedly downgraded talks with the UK.
The euro firmed following a stronger-than-expected Eurozone GDP print. The bloc’s economy grew 0.4% in the first three months of the year, easing pressure on the European Central Bank (ECB) to deliver imminent rate cuts.
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Thursday
Having recovered into the 1.17 mid-range the pound traded mostly sideways in the absence of influential UK data. It was little moved by a survey confirming that British manufacturing activity contracted for the seventh straight month in April, highlighting the impact of Trump's tariffs and Britain's tax hike for employers on business activity.
The dollar was buoyed by hopes for a US-China trade deal after the world’s second-largest economy indicated that it was open to trade talks with the US.
Friday
The pound euro rate bounced off the 1.17 level after the single currency was supported in part by data showing Eurozone annual consumer inflation remained unchanged at 2.2% in April, slightly above forecasts for the figure to print at 2.1%.
However, the decisive factor for investors in the euro was the rise in core inflation to 2.7% from 2.4%, exceeding forecasts for 2.5%. This closely watched inflation gauge dampened expectations for the ECB to cut interest rates.
Looking ahead
The BoE is expected to cut interest rates by 25 basis points on Thursday as the central bank considers the risks posed by a potential escalation in global trade tensions on the UK’s already sluggish growth outlook.