GBP/EUR Forecast Today: Pound Euro Ticks Up as German CPI Declines

April 1, 2025 - Written by Frank Davies

STORY LINK GBP/EUR Forecast Today: Pound Euro Ticks Up as German CPI Declines

The Pound to Euro exchange rate firmed on Monday after Germany released its latest inflation reading.

At the time of writing, the GBP/EUR was trading at around €1.1972, up roughly 0.2% from Monday’s opening levels.

Despite weakening against the Pound (GBP), the Euro (EUR) managed to hold steady and even strengthen against several of its peers on Monday following the release of Germany’s latest CPI data.

The figures showed that the headline inflation rate for March declined in line with market expectations, dropping from 2.3% to 2.2%.

Germany’s harmonised inflation rate, which is the European Central Bank’s (ECB) preferred measure, also fell, coming in at 2.3% - below the market forecast of 2.4% and down from the previous reading of 2.6%.

While the data increased expectations of an ECB interest rate cut, the Euro benefited from the day’s downbeat trading conditions, which bolstered its status as a safe-haven currency and kept it afloat.

At the start of the week, the Pound experienced some volatility, gaining strength against riskier currencies while maintaining a relatively steady position against others, despite a lack of major economic news from the UK.

Sterling's performance was largely driven by the negative trading environment on Monday.

The Pound's increasing sensitivity to risk allowed it to advance against its riskier peers, while it remained largely stable against safe-haven currencies.

With limited economic data from the UK, GBP exchange rates were predominantly influenced by broader market sentiment during most of Monday's European trading session.

Looking ahead to Tuesday, the primary factor influencing the Pound Euro exchange rate will likely be the release of the Eurozone's inflation data and its latest unemployment figures.

If the Eurozone's CPI reading cools as expected, it could further pressure the Euro, especially if the data reinforces expectations of an ECB interest rate cut.

Additionally, the Eurozone will release its latest unemployment rate, which could provide some modest support to EUR exchange rates if it remains unchanged as expected.

For the Pound, the only significant data release on Tuesday will be the UK's final manufacturing PMI data for March.

Should the index confirm a decline in the manufacturing sector for this month, GBP exchange rates could weaken following the release.

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TAGS: Pound Euro Forecasts