Pound Slides Against Euro as Headline Inflation Falls but Services Sticky

March 26, 2025 - Written by David Woodsmith

STORY LINK Pound Slides Against Euro as Headline Inflation Falls but Services Sticky

The Pound Sterling (currency:GBP) slumped against the Euro and US Dollar on Wednesday as the UK released its latest consumer price index (CPI) and Spring Statement.

At the time of writing, the Pound to Euro exchange rate (GBP/EUR) was trading at around €1.1961, down roughly 0.3% from Wednesday’s opening levels.

The Pound to Dollar exchange rate (GBP/USD) traded at 1.28987 (-0.36%).

On Wednesday, the Pound (GBP) opened lower against most of its major counterparts after the release of the UK's latest consumer price index (CPI) which showed a decline in both headline and core inflation rates for February.

This development led to increased expectations of an interest rate cut by the Bank of England (BoE) in May, which weighed on Sterling during the early part of the trading day.

Then the Pound continued its downward trend following the highly anticipated Spring budget announcement by UK Chancellor Rachel Reeves.

The budget included a series of spending cuts and a significant downgrade of the UK's growth forecast by the Office for Budget Responsibility (OBR), which was revised from 2% to 1% for the coming year, which further contributed to the Pound's decline.

On Wednesday, the Euro (EUR) fluctuated widely against most of its counterparts due to a lack of economic data from the Eurozone.

Without any new data to guide trading, the Euro's movements were largely influenced by the day's risk sentiment.

As the market mood turned optimistic, the Euro, seen as a safe-haven currency, found it difficult to gain ground against riskier currencies. However, it managed to hold its own against other safe-haven currencies.

As we look toward Thursday, the Pound Euro exchange rate could be primarily influenced by several speeches from European Central Bank (ECB) officials.

Notable speakers include ECB President Christine Lagarde, Isabel Schnabel, and Luis De Guindos. Any dovish remarks from these central bank members could weaken the Euro.

On the Pound's side, Bank of England official Swati Dhingra will also give a speech. This could also affect GBP exchange rates, especially in the wake of Wednesday's CPI results and the Spring Budget.

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TAGS: Pound Euro Forecasts