GBP/EUR exchange rate week review: pound slips to multi-week low versus euro
16/06/2025 to 20/06/2025: The pound dipped to a multi-week low amid the Bank of England's latest interest rate decision and downbeat UK data.
Monday
The pound euro (GBP/EUR) exchange rate trod water in the 1.17 range as investors avaided the pound ahead of the Bank of England’s (BoE) interest rate decision later in the week.
The euro was supported by its strong negative correlation with a declining dollar. However, the safe-haven single currency faltered against riskier counterparts amid a rise in market risk appetite.
Tuesday
With the latest BoE interest rate announcement looming, the pound euro rate dropped to a seven-week low below the 1.17 benchmark. The central bank was expected to leave interest rates untouched later in the week, but recent downbeat UK data left a rate cut on the table, denting the pound.
The euro fluctuated despite Germany’s latest ZEW economic sentiment index exceeding forecasts with strong improvement. However, the single currency wavered as Donald Trump claimed the EU was not offering a 'fair deal' on trade and threatened unilateral tariffs.
Wednesday
The pound traded without a clear direction, a fraction below the 1.17 benchmark, as investors refrained from placing aggressive bets ahead of the BoE’s interest rate decision the next day.
The UK’s latest consumer price index (CPI) had a limited impact, with core inflation cooling more than expected in May, but headline inflation remains well above the BoE’s 2% target.
The upside potential of the euro’s negative correlation with a declining dollar was limited by the Eurozone’s finalised CPI figures, which confirmed inflation dropped below the European Central Bank’s (ECB) target in May.
Thursday
The pound edged above 1.17 against the euro after the BoE left interest rates untouched, as expected, and Governor Andrew Bailey dampened expectations of a rate cut in August. He warned that the world was “highly unpredictable” and it’s difficult to predict when interest rates would next be lowered.
A lack of Eurozone data left the single currency exposed to wider market trends.
Friday
The pound euro exchange rate dropped to a fresh multi-week low around 1.167 after official data showed British retail sales tumbled 2.7% in May, well below the 0.5% decline forecast – their steepest drop in 18 months.
However, the pound’s losses were cushioned by easing tensions in the Middle East and the GfK consumers’ confidence survey, which showed consumer confidence in the UK rose to a six-month high in June.
Looking ahead
Manufacturing and services PMIs for June from the UK, Germany and the wider bloc hit the headlines on Monday. The UK data will help gauge any impacts from the US-UK trade deal, April's tax rises, and the recent government spending review.