Pound to Euro Ticks Higher as EUR Currency Struggles

March 13, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Ticks Higher as EUR Currency Struggles

The Pound-to-Euro exchange rate (GBP/EUR) experienced volatility on Thursday as investors weighed up the latest developments in Germany’s economic landscape.

At the time of writing, GBP/EUR traded at €1.1919, fluctuating within a narrow range.

The Euro (EUR) struggled for a clear trajectory on Thursday as investors assessed the economic prospects of Germany, the largest economy in the Eurozone.

Joachim Nagel, President of Germany’s central bank, the Deutsche Bundesbank, cautioned that new US tariffs and potential EU countermeasures could push Germany into another recession.

Germany’s economic performance has been sluggish since the Covid pandemic, with contractions recorded over the past two years.

Nagel warned that US tariffs could see the country face yet another economic downturn.

However, these concerns were somewhat offset by optimism ahead of Germany’s parliamentary debate on proposed reforms to borrowing and debt regulations.

Investors are hopeful that increased fiscal flexibility, allowing for greater investment in defence and infrastructure, could support economic recovery.

As a result of these mixed signals, the Euro wavered on Thursday.

Meanwhile, the Pound (GBP) also saw mixed movement on Thursday, with a lack of UK economic data leaving the currency struggling for momentum.

Uncertainty over the Bank of England’s (BoE) monetary policy stance also kept Sterling in check.

While markets broadly expect the BoE to maintain its current position, concerns over global economic headwinds and trade tensions could prompt policymakers to consider an interest rate cut.

Looking ahead, the GBP/EUR exchange rate may be influenced by the UK’s latest GDP figures as the week concludes.

Analysts anticipate a sharp slowdown in economic growth, with GDP expected to have dropped from 0.4% in December to just 0.1% in January.

If the data meets expectations, fears over the UK’s economic trajectory could intensify, fuelling speculation about a potential Bank of England rate cut and placing pressure on Sterling.

Meanwhile, further developments in Germany could shape EUR movement.

Any indications that fiscal policy changes are progressing could provide support for the Euro.

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TAGS: Pound Euro Forecasts