GBP/EUR exchange rate week review: pound tumbles from five-month high versus euro
02/02/2026 to 06/02/2026: The pound surged to a five-month high against the euro mid-week before tumbling sharply after a surprisingly close Bank of England rate hold signalled an almost certain cut in March.
Monday
The pound euro (GBP/EUR) exchange rate held near recent highs, finding modest support from stronger-than-expected UK manufacturing data. The finalised UK manufacturing PMI for January showed the index was revised up from 51.6 to 51.8 – the strongest expansion in factory activity since August 2024.
Tailwinds were strengthened by the first increase in new export orders in four years, together with a noticeable improvement in UK business confidence at the start of the year.
The single currency slipped lower following a downbeat German retail sales print that stoked concerns about the strength of consumer demand in the Eurozone’s largest economy.
Tuesday
The pound was subdued amid another quiet UK economic data calendar that left it without a clear direction. Investors also appeared cautious ahead of the Bank of England (BoE) interest rate announcement later in the week.
An absence of fresh data and caution ahead of the Eurozone inflation figures left the euro on the back foot.
Wednesday
The pound broke through the 1.16 resistance level, touching a fresh five‑month high against the euro. However, investors remained on hold ahead of the BoE policy meeting. They also digested the final UK services PMI figures for January, which confirmed that service sector growth reached its quickest pace in five months, but was lower than the 21-month peak initially forecast.
The single currency was subdued as Eurozone inflation fell to 1.7% in January, while the service sector PMI for the bloc was revised slightly lower.
Thursday
The pound plunged below the 1.15 level versus the euro after the BoE left interest rates unchanged, but a surprisingly close vote meant a cut next month is almost guaranteed.
The euro was largely rangebound following the European Central Bank’s (ECB) latest interest rate announcement. The ECB also voted to keep borrowing costs on hold, reiterating its belief that inflation will moderate at the 2% target despite recent appreciation in the single currency.
Friday
The pound edged higher, recovering a small portion of its heavy losses against the euro as a bout of selling pressure began to unwind.
The single currency was pressured slightly by data showing German exports rose more than expected, but industrial output fell in December. This underscored continued uncertainty over a recovery of Europe's powerhouse economy.
The pound euro exchange rate ended the week around 1.151.
Looking ahead
GDP figures for the final three months of last year dominate the data docket on both sides.
On Thursday, the UK print hits the headlines. Having got off to a strong start in Q1 2025, the domestic economy has struggled to achieve growth in subsequent quarters. The December and Q4 numbers hit the headlines on Thursday, which could be strong enough to avert a contraction, or even stagnation, in the last three months of 2025, but they are likely to remain far from ideal – potentially undermining the pound.