GBP/EUR exchange rate week review: pound touches 9-month high versus euro
09/03/2026 to 13/03/2026: The pound euro exchange rate climbed to a nine-month high, driven by euro weakness stemming from poor German economic data and surging energy prices. Though the pound's gains were capped by UK inflation fears and stagnant GDP growth.
Monday
The pound euro (GBP/EUR) exchange rate was undermined by growing inflation concerns amid soaring energy prices that are pushing UK government borrowing costs sharply higher.
With markets quickly lowering their forecasts for a Bank of England (BoE) interest rate cut this year, two-year gilt yields saw their sharpest rise since the volatility triggered by Liz Truss’s mini budget in 2022.
The euro was on the back foot after data showed declines in German factory orders and industrial output at the start of the year. This exacerbated pressure on the single currency, which had already been rattled by the recent spike in oil prices and renewed concerns over Europe’s energy outlook.
Tuesday
The pound edged into the 1.15 mid-range against the safer euro, as hopes grew that the conflict in the Middle East may ease sooner than previously expected.
The single currency was pressured further by figures showing that German exports contracted by 5.9% in January, stoking renewed concerns over the health of the Eurozone’s largest economy. The euro’s losses were cushioned by lower energy prices, which helped ease fears that a sudden surge could weigh heavily on growth in the Eurozone.
Wednesday
The pound rose to within touching distance of the 1.16 benchmark, reaching a five-week high, as escalating troubles in the Middle East dented the euro. Rising energy costs also undermined the single currency.
An absence of UK economic releases and the potential impact of the Middle East conflict on UK growth, interest rates and public finances saw the pound trade unevenly.
Thursday
The pound hit a nine-month high just shy of 1.16 against the euro as the single currency came under further pressure from rising energy costs. This was compounded by its negative correlation with a strengthening dollar. Both factors were linked to developments in the Middle East, where Iran continued attempts to disrupt the global energy supply.
The pound was subdued amid a lack of influential UK data and continued focus on developments in global energy markets. Rising oil and gas prices have led analysts to question whether the government will provide more energy bill support this year and how it could affect the UK’s fiscal outlook.
Friday
The pound faced headwinds after the UK’s latest GDP figures revealed the economy unexpectedly stagnated at the start of the year, while long-term inflation expectations remained stubbornly high. This prompted economists to predict that the renewed risk of persistent inflation will lead the BoE’s Monetary Policy Committee (MPC) to vote 8-1 in favour of a rate hold rather than a cut in March.
The single currency was undermined after industrial output in the bloc unexpectedly retreated in January, with challenges facing the sector expected to worsen amid the jump in energy prices.
The pound euro exchange rate ended the week at around 1.152.
Looking ahead
Economists have largely abandoned expectations for an interest rate reduction when the BoE’s Monetary policy Committee meets on Thursday. This favourable outlook for the pound comes as soaring energy prices, driven by the Iran war, raise inflation risks.