GBP/EUR exchange rate week review: pound rangebound against euro
02/06/2025 to 06/06/2025: The pound euro (GBP/EUR) exchange rate traded within the 1.18 range amid notable Eurozone data, an ECB rate cut and BoE rate rhetoric.
Monday
The pound euro (GBP/EUR) exchange rate traded sideways through the 1.18 range amid a lack of UK economic data. The UK currency showed little response to the finalised UK manufacturing PMI despite a slight upward revision to May’s reading.
The euro nudged higher thanks to its inverse relationship with a softening dollar. However, its upside remained constrained ahead of the European Central Bank’s (ECB) policy announcement on Thursday.
Tuesday
The pound jumped to within a whisker of the 1.19 level amid mixed comments from Bank of England (BoE) Governor Andrew Bailey and underwhelming inflation figures from the bloc.
Bailey said that although interest rates faced a downward trajectory, the pace and frequency of cuts is now “shrouded in a lot more uncertainty”.
The euro weakened after Eurozone inflation came in below expectations. May’s consumer price index fell from 2.2% to 1.9%, slipping below the ECB’s target and reinforcing expectations of a rate cut.
Wednesday
The pound weakened against the euro despite the UK’s final services PMI printing above its initial estimate.
Meanwhile, optimism over the ratification of the US-UK trade agreement did little to support the UK currency, which continued to struggle against stronger currencies.
The euro strengthened against weaker counterparts after the Eurozone’s final services PMI was revised upward, lifting overall private sector activity out of contraction in May. It also gained support from its strong inverse correlation with the declining dollar.
Thursday
The pound euro rate dipped into the 1.18 mid-range following the ECB’s interest rate announcement.
The single currency strengthened after the central bank delivered an expected 25 basis-point interest rate cut before revising down its 2026 growth and 2025 inflation forecasts.
Despite ECB President Christine Lagarde stating her concerns over the potential impact of US trade tariffs on the Eurozone economy, the euro was buoyed by a declining dollar.
The pound was rudderless amid an ongoing UK data lull.
Friday
A continued absence of notable data from the UK economy meant Eurozone GDP and retail sales figures were in sharp focus for investors.
Growth in the bloc was revised up to 0.6% in the first quarter, showing a year-on-year increase of 1.5%. This surpassed expectations for 1.2% growth and improved from the previous quarter’s growth rate of 1.2%.
The seasonally adjusted retail trade volume increased by 0.1% in April compared with March in the Eurozone and by 0.7% in the EU.
However, the euro’s gains were limited by gloomy comments from Christine Lagarde, who warned that survey data points to weaker prospects in the near term.
The pound euro exchange rate ended the week at around 1.186.
Looking ahead
The UK unemployment rate stands at its highest level in almost four years and is forecast to tick 0.1% higher to 4.6% when the latest figures are released on Tuesday – a downbeat assessment of the labour market that could weigh on the pound if it transpires.