Euro to Pound Rate Trading 0.85-0.87 Range as CPI Drops Temporarily

April 16, 2025 - Written by Ben Hughes

STORY LINK Euro to Pound Rate Trading 0.85-0.87 Range as CPI Drops Temporarily

Employment data and inflation data were released in the UK this week. Neither had a lasting impact on markets. CPI was lower but is likely to rise again later this year.

EURGBP is trading near 0.85 support after briefly exceeding 0.87 last week.

Stock markets have dropped overnight on Wednesday as US tech heavyweight Nvidia (NVDA) revealed it was ordered to halt exports of its H2O chip to China.

The U.S. government imposed new export restrictions on Nvidia due concerns that its technology could enhance China's military capabilities. The H20, designed to comply with prior U.S. restrictions, now faces export licenses due to fears it could be used in Chinese supercomputers. NVIDIA reported a $5.5 billion charge for inventory, purchase commitments, and reserves tied to the H20, with shares dropping nearly 6% in after-hours trading. This pulled the S&P500 lower by around 1.2% and the US dollar also dropped sharply, with USDJPY re-testing last week’s lows. EURUSD gained +0.9% to trade near 1.14.

Data has been on the quieter side this week and has been less of a driver than usual due to the market’s focus on the trade war. Most of the top tier releases have been in the UK with employment slightly weaker and inflation easing slightly.

Mixed Data Keeps the Pound Sterling in Check

Sterling is having a better week than it did last week when market stresses and liquidity issues led to some sharp falls against the euro. EURGBP traded at 0.824 in February and at last week’s high briefly exceeded 0.87. Now that markets have settled down, it is back near 0.85 which likely acts as support in the absence of any new drivers.

Key data out of the UK this week hasn’t changed the general backdrop. Tuesday’s employment release showed the unemployment rate remained steady at 4.4%, in line with forecasts and unchanged from the previous period. There was some minor bad news as the number of payrolled employees fell by 21,000 (0.1%) over the quarter. A provisional estimate for March 2025 showed a sharp decline of 78,000 (0.3%) month-on-month and 70,000 (0.2%) year-on-year, to 30.3 million, though this figure is subject to revision.


This was balanced out by some minor good news as average weekly earnings (including bonuses) grew by 5.6% year-on-year, slightly below the expected 5.7% and down from 5.8% previously. Earnings excluding bonuses rose by 5.9%, just under the anticipated 6.0%.

There was nothing to catch the eye or change BoE policy and the bank are likely to cut three times this year in a slow path to normalizing rates.

Wednesday’s inflation data was equally benign. The annual CPI inflation rate was 2.6%, down from 2.8% in February 2025, and slightly below the forecasted 2.7%. This looks encouraging at first glance, but is likely a temporary dip, Furthermore, services inflation, a key focus for the Bank of England, remained at 5.0%, signalling persistent domestic price pressures. In an interesting call, ING expect headline CPI to rise, but services inflation to fall, paving the way for regular rate cuts.

“UK headline inflation was lower than expected in March, but higher contributions from household energy and water bills will help take it to 3.5% or above in the second half of the year. At the same time, services inflation should come lower imminently, helping cement quarterly rate cuts from the Bank of England.”

This may exert gentle downwards pressure on Sterling which has enjoyed a period of comparatively high rates compared to most other G7 currencies. However, the rise in EURGBP to 0.87 has faded for now and a 0.85-0.87 trading range looks likely as volatility dies down.

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TAGS: Euro Pound Forecasts