Pound-to-Euro Rate Rangebound as Eurozone Inflation Cools

April 2, 2025 - Written by David Woodsmith

STORY LINK Pound-to-Euro Rate Rangebound as Eurozone Inflation Cools

The Pound was trapped in a narrow range on Tuesday after the Eurozone released its latest inflation reading.

At the time of writing, the Pound Euro exchange rate (GBP/EUR) was trading at around €1.1951, virtually unchanged from Tuesday’s opening levels.

On Tuesday, the Euro (EUR) had difficulty attracting buyers after the release of the Eurozone's latest consumer price index (CPI) as the data showed that both headline and core inflation declined last month.

Headline inflation fell from 2.3% to 2.2%, while core inflation dropped more than expected, from 2.6% to 2.4%, instead of the forecasted 2.5%.

Building on Monday's inflation report from Germany, which also showed a decline in both headline and core inflation, bets on an interest rate cut by the European Central Bank (ECB) increased on Tuesday.

As a result, the Euro weakened against several of its major trading partners and remained largely flat against others, as EUR exchange rates struggled to gain traction following the release.

On Monday, the Pound (GBP) stayed largely unchanged against most of its trading partners as a lack of UK data releases left Sterling without a clear direction.

Investors in the Pound were also likely hesitant to make any significant moves ahead of the tariff announcements by US President Donald Trump on Wednesday.

If the UK does not secure an exemption from Trump’s global tariffs, it could lead to a weakening of GBP exchange rates, which partly explains the Pound’s muted performance on Tuesday.

As we look towards Wednesday, the main factor influencing the Pound Euro exchange rate will likely be Trump's tariff announcements.

Given that the Eurozone is expected to be one of the most affected regions by these tariffs, the common currency’s value could take a hit on Wednesday depending on the specifics of the announcement.

For the Pound, if the UK is granted an exemption from the tariffs, then GBP exchange rates could experience a notable boost in mid-week trading.

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TAGS: Pound Euro Forecasts