GBP/EUR exchange rate week review: pound trades in narrow range versus euro
04/05/2026 to 08/05/2026: The pound traded in a tight range against the euro throughout the week, as UK local election uncertainty and cautious market sentiment capped gains.
Monday
The pound euro (GBP/EUR) exchange rate was subdued amid an empty economic calendar during the May Day Bank Holiday.
Tuesday
The increasingly risk-sensitive pound rose to within touching distance of the 1.16 benchmark against the safer euro as global market sentiment improved.
The single currency was also subdued amid a quiet Eurozone economic data calendar.
Wednesday
The pound traded sideways after a modest upward revision to the UK’s final services PMI for April was offset by political uncertainty ahead of the closely watched local elections.
The euro was buoyed by its strong inverse relationship with a declining dollar. However, the safer single currency struggled against riskier peers like the pound amid a broadly upbeat market mood. A contraction in Eurozone private sector activity also restricted its upside.
Thursday
The pound euro rate continued to trade in a narrow range amid investor caution as the UK headed to the polls for highly anticipated local elections. Investors in the pound closely monitored the vote’s potential impact on UK bond markets and the Labour Party leadership if, as expected, Labour suffered heavy losses.
The euro traded without a clear direction following the release of encouraging German industrial data which, along with shifting European Central Bank (ECB) expectations, created choppy conditions for the single currency.
A stockpiling boost tied to the Middle East crisis drove a jump in German factory orders in March, while easing geopolitical risks saw euro traders dial back aggressive ECB rate hike pricing.
Friday
The pound euro exchange rate remained subdued as traders reacted cautiously to early UK local election results that pointed to significant losses for both Labour and the Conservatives, while Reform UK posted substantial gains.
The results intensified speculation over the UK’s political outlook and renewed lingering concerns about fiscal stability. Pound sentiment was also restricted by fears that the election results could place additional pressure on government interest rates.
A surprise decline in German industrial production during March had minimal impact on the single currency.
The pound euro exchange rate ended the week around 1.156.
Looking ahead
Investors will closely monitor UK GDP data for March on Thursday, with the figures indicating the extent of the economic damage from the Iran war. The UK looks vulnerable, as reflected by the International Monetary Fund (IMF), which recently gave it the biggest growth downgrade among big economies for this year.