GBP/EUR exchange rate strikes 10-week low at end of June
The pound euro exchange rate leapt to within touching distance of the 1.19 level on 3 June following mixed comments from Bank of England (BoE) Governor Andrew Bailey and underwhelming inflation figures from the Eurozone.
The pair dipped into the 1.18 mid-range on 5 June after the European Central Bank (ECB) announced an expected 25 basis-point interest rate cut, before revising down its 2026 growth and 2025 inflation forecasts – boosting the euro.
The pound traversed the 1.18 mid-range before a lacklustre UK jobs report applied downward pressure on 10 June. The UK unemployment rate increased to its highest level since August 2021, and wage growth eased, stoking speculation of a Bank of England (BoE) interest rate cut.
The pound fell below 1.18 versus the euro the following day after the UK government’s spending review received a muted response from investors. Meanwhile, the euro benefited from its negative correlation with a declining dollar and optimism that EU-US trade negotiations would be prioritised by the Trump administration following the China agreement.
Downbeat GDP data showing the UK economy contracted far more than forecast in April extended the pound’s losses on 12 June. This was compounded by euro strength following hawkish comments from ECB officials, leaving the UK currency a fraction above 1.17 against the single currency – a six-week low.
The pound euro rate recovered to the 1.17 mid-range the following day after news of easing German inflation in May dented the single currency.
With the latest BoE interest rate looming, the pound fell below the 1.17 level on 17 June – touching a fresh multi-week low. Although the central bank was expected to hold interest rates steady, recent weak UK data opened the slight possibility of a rate cut, which weighed on the pound.
The pound traded without a clear direction ahead of the BoE’s policy decision the next day. The impact of the UK’s CPI for May was limited, with core inflation cooling more than expected, but headline inflation remained well above the central bank’s 2% target.
The UK currency edged above 1.17 on 19 June after the BoE held rates steady, as expected, and hawkish comments from Governor Andrew Bailey dampened expectations of a reduction in August.
The pound euro rate dropped to a fresh multi-week low below 1.17 on 20 June after data showed British retail sales sank 2.7% in May – their biggest decline in 18 months.
The pair wobbled on 23 June following the release of PMI figures from both sides. British business activity increased modestly in June, but employers cut jobs more quickly and raised concerns about tensions in the Middle East. Meanwhile, the euro weakened after the Eurozone’s PMI reports for June missed forecasts. The downbeat figures showed that growth in the bloc’s private sector is teetering a fraction above the contraction threshold.
Having jumped above the 1.17 benchmark against the safer euro amid an improving market mood, as investors welcomed the Israel-Iran ceasefire agreement, the pound arrested its gains on 27 June. Applying downward pressure was a lack of fresh UK data and speculation that a trade deal between the EU and US is on the horizon. This optimism helped the euro sidestep a weaker-than-expected Eurozone sentiment index for May.
The pound slumped into the 1.16 mid-range versus the euro on 30 June, despite confirmation that the UK had the fastest-growing economy in the G7 in Q1. The UK currency faltered amid accompanying figures that showed real household disposable income per head fell for the first time in almost two years.
The pound euro exchange rate ended June at around 1.165 – a 10-week low.
GBPEUR: 3-Month Chart
Looking ahead
Influential data from the UK economy in July: Consumer Price Index (16 July), ILO Unemployment Rate (17 July), S&P Global Composite PMI (24 July), Retail Sales (25 July).
Speculation is rife that the ECB is approaching the end of its rate-cutting cycle, with most analysts expecting a pause in July and a cut in September. A cut on 24 July looks increasingly unlikely, as the ECB waits for greater clarity on US trade policy.