GBP/EUR exchange rate week review: pound hits lowest level in more than two months versus euro
23/02/2026 to 27/02/2026: The pound fell to its lowest level in more than two months against the euro as Labour's crushing by-election defeat fuelled fresh doubts over Keir Starmer's leadership. Early gains, driven by strong UK data and hawkish BoE signals, unravelled amid political uncertainty.
Monday
The pound euro (GBP/EUR) exchange rate firmed as a stronger-than-expected batch of UK economic releases from the previous week continued to lend support. However, political uncertainty surrounding a forthcoming Greater Manchester by-election kept a lid on the pound’s upside.
The single currency was supported by a further improvement in Germany’s IFO business climate index. Despite gains, worries about new US tariffs on EU–US trade limited the euro's rise.
Tuesday
The pound continued its upward momentum following hawkish signals from Bank of England (BoE) officials. Governor Andrew Bailey remarked that the BoE’s March interest rate decision “genuinely remains an open question”, while Chief Economist Huw Pill highlighted persistent upside risks to inflation.
The euro was choppy amid an absence of influential Eurozone economic data. Ongoing concerns over the Russia-Ukraine conflict applied pressure after Moscow doubled down on its commitment to military objectives on the fourth anniversary of its full-scale invasion.
Wednesday
The increasingly risk-sensitive pound tested the 1.15 benchmark against the safer euro, as optimism engulfed markets. However, the UK currency’s gains were limited by investor caution ahead of the Gorton and Denton by-election, widely viewed as a gauge of support for Prime Minister Keir Starmer.
The euro softened after German consumer confidence unexpectedly fell, reinforcing concerns about the resilience of Europe’s powerhouse economy.
Thursday
The pound fell sharply to around 1.142 against the euro amid political uncertainty on the day of the highly anticipated Gorton and Denton by-election. This drew considerable interest from investors, who viewed it as a crucial measure of confidence in Keir Starmer during a challenging period for the Prime Minister.
The euro was subdued following comments from European Central Bank (ECB) President Christine Lagarde. She indicated that the ECB expects inflation in the Eurozone to reach its 2% target within the next few years, which supports the likelihood that officials will keep interest rates unchanged.
Friday
The pound dipped below 1.14, hitting its lowest level in more than two months, after Labour suffered a crushing defeat in the Gorton and Denton by-election, renewing doubts surrounding Starmer’s leadership.
The euro was bolstered by comments from US officials indicating that Washington might delay tariff hikes on European goods.
Looking ahead
An absence of notable data from the UK economy could leave the pound exposed to the effects of UK political uncertainty.
Flash Eurozone CPI figures for February hit the headlines on Tuesday. The headline rate is forecast to drop to 1.7% from 2%.