GBP/EUR exchange rate week review: pound jump to 5-week high against euro
05/05/2025 to 09/05/2025: The pound was given a shot in the arm by a hawkish interest rate cut from the Bank of England and news of a UK-US trade deal.
Monday
The pound euro (GBP/EUR) exchange rate, which started the week at around 1.172, was subdued amid an empty economic calendar due to the bank holiday.
Tuesday
The pound briefly jumped above the 1.18 benchmark against the euro, before settling in the 1.17 mid-range, as news of a UK-India trade deal buoyed investors along with hopes for a UK-EU agreement. The UK currency’s tailwinds were strengthened by a positive impact assessment of the government’s planning and infrastructure reforms.
The euro fluctuated amid political uncertainty in Germany and its negative trading relationship with a declining dollar.
Wednesday
The pound euro exchange rate traded sideways through the 1.17 mid-range ahead of the Bank of England’s (BoE) interest rate decision. It then leapt to within touching distance of the 1.18 benchmark overnight after reports surfaced that Donald Trump was preparing to announce a new trade agreement with the UK.
The euro was boosted by Germany’s factory orders report for March which reported a sizeable jump in demand that exceeded forecasts and supported hopes that the German economy is recovering.
Thursday
The pound euro exchange rate rose sharply to a five-week high above 1.18 following a hawkish Bank of England (BoE) interest rate cut. With two policymakers voting to leave rates on hold and the central bank only fractinally lowering its inflation forecasts, markets now expect just two more cuts in 2025 – one fewer than expected before the meeting.
The UK currency was given further support by the announcement of a UK-US trade deal, increasing confidence that the UK’s trade prospects are brighter than the EU.
The single currency was initially supported by stronger-than-expected German industrial production figures, before facing selling pressure due to its strong negative correlation with a rising dollar.
Friday
The pound edged higher versus the euro as interest rate and trade deal tailwinds persisted. A data lull on both sides left the safer single currency exposed to a positive market mood, causing it to soften.
The pound euro rate ended the week at around 1.182.
Looking ahead
Fragile growth, rising trade tensions and increased cost pressures are all shaping the UK’s economic outlook. If this is reflected by downbeat GDP figures from the UK economy on Thursday, the pound could retreat.