Pound to Euro Forecast: GBP Slips vs EUR amid Eurozone Economic Optimism

March 5, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Forecast: GBP Slips vs EUR amid Eurozone Economic Optimism

Pound Sterling (EUR) weakened against the Euro (EUR) on Wednesday as the common currency gained strength from positive economic news.

At the time of writing, the Pound Euro (GBP/EUR) exchange rate was trading at around €1.2002, down roughly 0.4%from Wednesday’s opening levels.

On Wednesday, the Euro (EUR) rose against most of its counterparts, supported by news that the anticipated members of Germany’s next coalition have reached a deal on a debt brake.

The Euro also benefited from a weakening US Dollar, due to their inverse relationship.

Furthermore, despite a mixed set of economic data from the Eurozone, including a worse-than-expected services PMI and a better-than-expected PPI release, the single currency maintained its strength.

On Wednesday, the Pound (GBP) remained resilient against most of its major peers after the release of the UK's latest services PMI.

The finalised index for February remained in expansion territory,(a reading above 50) with a reading of 51, up from 50.8, though slightly below the expected 51.1.

Despite this, Sterling held its strength and even made slight gains against some of its counterparts.

Looking ahead to Thursday, the primary factor influencing the Pound Euro exchange rate will likely be the European Central Bank’s (ECB) upcoming interest rate decision.

The ECB is widely anticipated to cut interest rates by 25 basis points. However, if this rate cut is accompanied by dovish forward guidance, indicating a more cautious stance on future monetary policy, the Euro could
weaken as the trading session progresses.

On the other hand, the Pound may lack a clear direction on Thursday, as there is no scheduled UK economic data to provide guidance. This could lead to Sterling trading in a more rangebound manner, influenced more
by market sentiment and external factors.

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TAGS: Pound Euro Forecasts