Noticias de la Cámara
GBP/EUR slides following abysmal UK economic data
03/07/2025
The pound euro exchange rate weakened through June, as disappointing UK data sapped Sterling sentiment.
What happened last month?
The pound struggled through the first half of June as it was undermined by lacklustre UK data. UK unemployment rose to 4.6% in April – its highest level in almost four years – while GDP contracted 0.3%. This raised concerns about the health of the UK economy amid rising taxes.
In addition, market anxiety dampened demand for Sterling against the safer euro and US dollar amid the crisis in the Middle East.
However, GBP attracted some support in the wake of the Bank of England’s (BoE) interest rate decision. The bank voted 6-3 to leave interest rates unchanged, with Governor Andrew Bailey also pushing back slightly on bets for a rate cut in August.
Furthermore, a recovering appetite for risk helped the pound rebound from a two-month low against the euro at the end of June.
Meanwhile, the euro marched higher through June, supported largely by its negative correlation with the weaker US dollar.
A hawkish shift from the European Central Bank (ECB) also supported EUR exchange rates. After delivering an expected rate cut, the ECB indicated that it was nearing a neutral rate, causing investors to pare back further rate cut bets.
Some upbeat German data kept EUR afloat in the second half of June, despite a surge in USD, with the ZEW economic sentiment index jumping to a three-month high. EUR then strengthened at the end of the month amid the US dollar’s renewed decline, with EUR/USD hitting its highest level since September 2021.
GBP/EUR forecast
A key catalyst for movement for the GBP/EUR exchange rate in July will be the ECB’s latest interest rate decision.
While no policy changes are expected this month, the euro may falter if the bank signals it may consider cutting interest rates again in the near future.
Meanwhile, GBP investors will keep a close eye on upcoming UK economic releases as they seek to gauge whether the BoE will pursue a rate cut in August. Expect to see the pound struggle if UK data continues to fall short of expectations.
