GBP/EUR exchange rate week review: pound climbs to 5-week high versus euro
01/12/2025 to 05/12/2025: The pound rose to a five-week high against the euro as upbeat UK services data and shifting market sentiment overshadowed early-week jitters.
Monday
The pound euro (GBP/EUR) exchange rate fell below 1.14 as the economic outlook darkened. KPMG predicts UK growth of just 1% in 2026, as unemployment rises and consumer confidence remains weak.
The single currency firmed amid its inverse relationship with a softer dollar. This helped the euro shrug off a downward revision to the Eurozone manufacturing PMI for November.
Tuesday
The pound stumbled into the 1.13 mid-range versus the euro as ongoing post-budget unease continued to dampen demand for the UK currency. Reports of tension between the Treasury and the Office for Budget Responsibility (OBR) after chaotic pre-budget leaks unsettled investors in the pound.
A buoyant market mood and mixed inflation figures left the euro subdued. The headline CPI for the Eurozone rose unexpectedly in November, but underlying inflation stayed flat, leaving the single currency lacking momentum.
Wednesday
The pound rose sharply above the 1.14 benchmark against the euro after the UK services PMI for November was revised higher. The data indicated a moderate deceleration along with a significant increase in input cost pressures, attributable to higher wage growth.
The euro was supported by an upgraded Eurozone services PMI reading and its inverse relationship with a weakening dollar. However, its upside was limited by fading optimism around a Russia-Ukraine ceasefire, as reports indicated that negotiations between the US and Russia had stalled.
Thursday
The pound climbed to a five-week high in the 1.14 mid-range amid a brighter risk appetite, post-budget market activity, and the absence of notable UK economic data.
The single currency initially benefitted from its strong inverse relationship with a weakening dollar. However, lingering concerns about Europe's tensions with Russia and fading optimism over peace in Ukraine led to the euro arresting some gains.
Friday
With the UK economic calendar remaining virtually empty, the pound traded without a clear direction.
The single currency was supported by robust business and growth data.
Stronger-than-expected German factory orders – which rose by 1.5 % in October, beating forecasts – suggest improving domestic demand and add to confidence that the Eurozone’s largest economy is stabilising.
A solid Eurozone GDP reading – showing continued growth across the bloc – created further tailwinds for the euro.
The pound euro rate ended the week around 1.144.
Looking ahead
GDP data from the UK economy hits the headlines on Friday, with economists expecting the figures to show continued modest growth in October. This could support the pound as the odds of further policy easing by the BoE diminish.