Pound-to-Euro Strikes New Seven-Month High

May 27, 2025 - Written by David Woodsmith

STORY LINK Pound-to-Euro Strikes New Seven-Month High

Looking ahead to Wednesday, the Euro may face fresh headwinds depending on the tone of Germany’s latest labour market report.

While consensus points to Germany’s unemployment rate holding steady at 6.3%, recent economic uncertainty, especially surrounding transatlantic trade tensions, has some analysts warning of a possible uptick to 6.4%. A rise in unemployment could stoke concerns about the health of Europe’s largest economy and drag on EUR exchange rates.

Meanwhile, with the UK economic calendar relatively light midweek, the Pound's movement may be more heavily influenced by overall market sentiment.

The Pound to Euro (GBP/EUR) exchange rate firmed on Tuesday as a recovery in the US Dollar placed fresh pressure on the single currency.

At the time of writing, GBP/EUR was trading near €1.1935. Up roughly 0.2% from Tuesday’s opening levels.

The Euro (EUR) found itself on the defensive through Tuesday’s session, with EUR exchange rates slipping as a recovering US Dollar sapped demand for the single currency.

The ‘greenback’ staged a modest comeback during early European trade, partially reversing the losses it suffered at the start of the week.


This partially reversed the rally in EUR/USD on Monday, US-EU trade relations, after US President Donald Trump announced a delay in his planned 50% tariffs on EU imports following what he described as a ‘very nice’ phone call with European Commission President Ursula von der Leyen.

The downturn in the Euro also came despite the Eurozone economic sentiment printing above expectations

May’s index climbed from 93.6 to 94.8, beating forecasts for a more modest rise to 94, but still ultimately falling short of regaining its long-term average, tempering optimism about the bloc’s economic resilience.

The Pound (GBP) firmed on Tuesday as UK markets reopened after the long weekend, bringing with them a wave of cautious optimism over the country’s economic prospects.

Hopes that the UK is on the cusp of finalising new trade deals with the US, India, and the EU helped underpin the Pound’s strength. Investors are increasingly optimistic that renewed trade links could reinvigorate UK growth.

Additionally, speculation surrounding the Bank of England’s (BoE) next policy move lent further support to the Pound. Markets are speculating that the BoE may opt for a longer pause in rate cuts, amid signs the UK economy may hold up better than initially expected.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts