Pound to Euro Outlook: GBPEUR Flat following ECB Interest Rate Cut

January 31, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Outlook: GBPEUR Flat following ECB Interest Rate Cut

Pound Sterling (GBP) was trapped in a narrow range against the Euro (EUR) on Thursday following the publication of the European Central Banks (ECB) latest interest rate decision.

At the time of writing, the Pound to Euro (GBP/EUR) exchange rate was trading at around €1.1951, virtually unchanged from Thursday’s opening levels.

On Thursday, the Euro (EUR) maintained its position against most of its counterparts following the European Central Bank’s latest interest rate meeting.

As anticipated by the markets, the ECB decided to cut interest rates by 25 basis points in a unanimous decision.

In a subsequent press release, ECB president Christine Lagarde noted that the Eurozone’s economy is expected to remain sluggish in the short term, but she highlighted there is a roadmap for recovery.

The central bank stressed that any future interest rate adjustments will remain contingent on incoming economic data, a factor that likely contributed to the Euro's stability after the announcement.

On Thursday, the Pound (GBP) struggled to attract significant investor attention and remained largely stable against most other currencies.

This stagnation was mainly attributed to the absence of economic data releases this week, which continued to impact Sterling's performance on Thursday.

Despite this, the Pound managed to hold its ground, supported by an overall positive market sentiment and its increasing responsiveness to risk.

GBP/EUR Exchange Rate Forecast: Several German Data Releases to Drive Movement

As we move into Friday, the Pound Euro exchange rate will likely be influenced primarily by several key economic data releases from Germany, the Eurozone’s largest economy.

On the agenda for Germany are the latest retail sales figures, unemployment change, and the most recent inflation rate.

These data points have the potential to inject significant volatility into the euro, particularly if they deviate from what the market is expecting.

On the other hand, the Pound may lack a clear direction as the week wraps up, given that there are no UK economic data releases scheduled for Friday.

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TAGS: Euro Forecasts Pound Sterling Forecasts