The Pound to Euro (GBP/EUR) exchange rate edged higher on Thursday, defying expectations as the Bank of England (BoE) cut interest rates by 25 basis points. At the time of writing, GBP/EUR traded near €1.1791, up 0.3% from the day’s opening levels.
Why Did the Pound Strengthen After the BoE Rate Cut?
While the BoE’s decision to lower rates was widely anticipated, the split in the Monetary Policy Committee (MPC) vote provided unexpected support for Sterling (GBP). The breakdown revealed:
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5 members voted for a 25bps cut
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2 members favored holding rates steady
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2 members pushed for a 50bps cut
This divergence suggests that UK policymakers remain cautious about aggressive easing, reducing fears of a prolonged rate-cutting cycle. Additionally, optimism around potential UK-US trade talks further bolstered the Pound.
Euro (EUR) Holds Steady on Strong German Data
Despite losing ground against the Pound, the Euro (EUR) found support from upbeat German economic data:
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German Trade Balance (March): Surged to €21.1B (vs. €19.1B forecast)
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German Industrial Production (March): Jumped 3% MoM (vs. 0.8% expected)
These figures eased concerns over the Eurozone’s largest economy, preventing a sharper EUR decline.
GBP/EUR Forecast: What’s Next?
With no major UK or Eurozone data due Friday, market sentiment and BoE Governor Andrew Bailey’s speech will drive GBP/EUR movements.
Key Scenarios:
✅ If Bailey hints at slower rate cuts → Pound could extend gains
❌ If he signals further easing ahead → GBP/EUR may retreat
Technical Levels to Watch:
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Resistance: €1.1820 (near-term high)
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Support: €1.1750 (recent low)
Conclusion: Will GBP/EUR Continue Rising?
The Pound to Euro exchange rate remains resilient despite the BoE’s rate cut, supported by hawkish MPC divisions and trade deal hopes. However, Bailey’s tone will be crucial in determining whether this uptrend holds. Traders should monitor risk sentiment and central bank commentary for fresh directional cues.
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