EUR/GBP Gains as Sterling Feels UK Political Pressure

Key Moments

EUR/GBP trades near 0.8771, close to its highest level since December 19 as Sterling comes under broad selling pressure.
UK Labour’s surprise by-election loss and a drop in GfK Consumer Confidence to -19 weigh on sentiment toward the Pound.
German inflation data softens, but the Euro holds firm against GBP amid expectations of steady ECB policy.

Euro Strengthens as Sterling Faces Political Headwinds

The Euro (EUR) is edging higher against the British Pound (GBP) on Friday, with the cross supported by renewed weakness in Sterling amid mounting political uncertainty in the United Kingdom. At the time of writing, EUR/GBP is trading around 0.8771, hovering close to its strongest level since December 19.

Selling pressure on GBP has intensified following a surprise result in a UK parliamentary by-election. The Labour Party lost the Greater Manchester seat of Gorton and Denton, a constituency it had held for nearly a century. The unexpected defeat has heightened scrutiny of Prime Minister Keir Starmer’s leadership and has sparked internal debate within Labour over the prospect of a leadership challenge ahead of the next general election.

UK Data: Consumer Confidence Deteriorates

Domestic data has added to the negative tone around the Pound. The latest GfK Consumer Confidence index fell to -19 in February, compared with -16 in January, undershooting the forecast of -15. The weaker reading underscores softening sentiment among UK consumers and contributes to the cautious outlook on the UK economy and currency.

Eurozone: Softer German Inflation Fails to Knock Euro

In the Eurozone, a moderation in German inflation has not derailed the constructive tone toward the Euro against Sterling. Preliminary figures show Germany’s Consumer Price Index (CPI) increased 0.2% month-on-month in February, below the 0.5% consensus, but slightly above the prior 0.1% rise. On a yearly basis, CPI eased to 1.9% from 2.1%, missing expectations of 2%.

The preliminary Harmonized Index of Consumer Prices (HICP) rose 0.4% month-on-month, short of the 0.5% forecast but rebounding from -0.1% previously. On an annual basis, HICP slowed to 2.0% from 2.1%.

Despite the softer inflation readings, the Euro remains underpinned against GBP, supported by expectations of a relatively steady policy stance from the European Central Bank (ECB).

Monetary Policy Expectations: BoE Seen Turning Dovish, ECB Steady

On the interest rate front, growing expectations that the Bank of England (BoE) may adopt a more dovish stance are weighing further on the Pound. Market participants are increasingly pricing in the possibility of a rate cut at the March meeting, amid signs of cooling inflation and weakening labor market conditions in the UK.

In contrast, the European Central Bank is widely anticipated to leave interest rates unchanged through the rest of 2026, with inflation seen stabilizing below its 2% target. This divergence in policy expectations between the BoE and ECB is lending additional support to EUR/GBP.

Intraday Performance of GBP Against Major Currencies

The table below shows the percentage change of the British Pound (GBP) against major currencies today. According to the data, the British Pound was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.07%	0.34%	0.03%	-0.02%	0.25%	0.22%	-0.42%
EUR	-0.07%		0.28%	-0.07%	-0.08%	0.18%	0.14%	-0.49%
GBP	-0.34%	-0.28%		-0.36%	-0.36%	-0.10%	-0.14%	-0.76%
JPY	-0.03%	0.07%	0.36%		-0.02%	0.23%	0.19%	-0.43%
CAD	0.02%	0.08%	0.36%	0.02%		0.26%	0.21%	-0.41%
AUD	-0.25%	-0.18%	0.10%	-0.23%	-0.26%		-0.03%	-0.67%
NZD	-0.22%	-0.14%	0.14%	-0.19%	-0.21%	0.03%		-0.63%
CHF	0.42%	0.49%	0.76%	0.43%	0.41%	0.67%	0.63%

How to Read the FX Heat Map

The heat map displays the percentage change of major currencies against one another. The currency listed in the left-hand column acts as the base, while the currency shown along the top row is the quote. For instance, selecting the British Pound in the left column and moving across to the US Dollar cell shows the percentage move for GBP (base)/USD (quote).