GBP/EUR exchange rate week review: pound subdued as markets weigh BoE and ECB rate outlooks
06/04/2026 to 10/04/2026: The pound experienced a measured week against the euro as markets weighed the prospect of interest rate hikes from both the Bank of England and the European Central Bank.
Monday
The pound euro (GBP/EUR) exchange rate was subdued amid an empty economic calendar during the Easter bank holiday.
Tuesday
The pound edged higher but remained near early-March levels against the euro as investors digested a mixed set of UK PMI figures. March's final services reading showed activity eased to its weakest level in almost a year, while ongoing price pressures increased the likelihood of Bank of England (BoE) rate hikes this year.
The euro shrugged off sluggish private-sector activity in the Eurozone as inflation dynamics attracted market attention. Final PMI data for March revealed input costs rising at their fastest rate in more than three years, supporting forecasts of multiple early European Central Bank (ECB) rate hikes.
Wednesday
The pound ticked higher against the euro, briefly edging above 1.15, amid a risk-on market mood and a notable decline in UK government bond yields that assuaged concerns surrounding the UK’s economic outlook.
Meanwhile, the euro was undermined by softer-than-expected German factory orders and a contraction in Eurozone retail sales. This was compounded by the US-Iran ceasefire, which triggered a sharp fall in energy prices that prompted investors to scale back expectations of an ECB rate hike this month.
Thursday
The pound traded sideways against the euro, as uncertainty surrounding the US-Iran ceasefire prompted a fresh uptick in UK gilt yields, raising concerns about the cost of introducing additional energy support.
The euro was buoyed in part by its inverse relationship with a softening dollar. However, the single currency’s upside potential was limited by mixed German data, which showed exports recovering but industrial production unexpectedly disappointing.
Friday
The pound continued to trade in a narrow range versus the euro. With little in the way of UK economic releases, broader market sentiment and data from the Eurozone dictated movement.
German inflation accelerated to 2.8% in March, confirming preliminary figures and reinforcing market predictions for roughly two ECB interest rate hikes in 2026 – a hawkish outlook that supported the single currency.
The pound euro exchange rate ended the week around 1.147.
Looking ahead
GDP figures from the UK economy in February hit the headlines on Thursday. Economic growth has been weak at the end of 2025 and into 2026, but is forecast to pick up.
Scheduled speeches from BoE Governor Andrew Bailey and ECB President Christine Lagarde will be closely monitored by investors for clues about their policy stance amid inflationary pressure.