Pound Serling Slides Against Euro on US Equity Selloff, GBP/EUR Nears 1.18

March 11, 2025 - Written by David Woodsmith

STORY LINK Pound Serling Slides Against Euro on US Equity Selloff, GBP/EUR Nears 1.18

Pound Sterling (GBP) edged lower against the Euro (EUR) and US Dollar (USD) on Monday as stronger-than-expected German industrial production figures bolstered the single currency.

At the time of writing, the Pound to Euro exchange rate (GBP/EUR) traded at €1.1894, down around 0.2% from the session’s opening levels.

The Euro extended its recent winning streak on Monday, building on last week’s strong performance, which saw EUR post its best weekly gains in 16 years.

The latest boost for the common currency came from Germany’s January industrial production data, which beat forecasts. Output in the Eurozone’s largest economy grew by 2%, surpassing the expected 1.5% increase.

Additionally, December’s contraction in industrial production was revised to a smaller decline. Instead of the initially reported 2.5% contraction, output only shrank by 1.5% in the final month of 2024.

This stronger-than-expected data has fuelled optimism that Germany’s economic outlook may be improving. Following prolonged stagnation, hopes are rising that increased infrastructure spending and new fiscal policies under the incoming coalition government could help Germany regain momentum.

Meanwhile, the Pound (GBP) softened on Monday amid a lack of UK economic data, leaving it vulnerable to shifts in market sentiment.

With risk appetite waning, the increasingly risk-sensitive Pound struggled for support. Concerns about a potential global trade war intensified as China’s latest retaliatory tariffs on US agricultural goods came into effect.

Additionally, remarks from US President Donald Trump added to market jitters. Speaking on Fox News, Trump did not rule out the possibility of an economic downturn, further dampening investor confidence.

Looking ahead, Tuesday’s economic calendar is relatively quiet for both the Pound and the Euro. As a result, GBP/EUR movement may be driven by broader market sentiment and geopolitical developments.

Any fresh signals from Trump regarding potential 25% tariffs on EU goods could weigh on the Euro. Meanwhile, continued risk aversion amid global economic uncertainty could put pressure on the Pound.

On Wednesday, three key European Central Bank (ECB) officials are set to speak. ECB President Christine Lagarde will address markets in the morning, followed by comments from policymakers Joachim Nagel and Philip Lane later in the day.

If they reiterate that interest rate cuts will proceed cautiously, the Euro could strengthen. However, any unexpectedly dovish remarks may see EUR lose ground.

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TAGS: Pound Euro Forecasts