GBP/EUR: Pound Lower vs. Euro Despite High UK Inflation

The pound surged to more than a 2 year high versus the euro on Wednesday as polls indicate that the UK would avoid a hung parliament. The pound euro exchange rate rallied to a peak of €1.1832, its highest level since May 2017. The pair closed at the high.

The latest poll gave the Conservatives a comfortable 10-point lead over Labour. Should the Tories manage to hold this lead then the UK would avoid a hung Parliament. Investors are tying a Conservative majority to a Brexit deal being agreed in Parliament and the UK leaving the EU on 31st January, putting an end to lingering Brexit uncertainty.

However, this doesn’t mean it will be plane sailing into the elections. Back in 2017 the polls narrowed sharply heading into the elections. Should that happen over the coming days, the possibility of a hung parliament increases, and the pound could come under pressure.

Pound investors were so focused on the polls that they shrugged off data that showed the UK service sector contracted in November. The service sector pmi printed at 49.3, down from October’s 50, but ahead of analyst’s expectations. This marks the third straight month that the dominant service sector and main driver of the British economy failed to grow, adding to fears of a further slump in the UK economy.

With no UK economic data due to be released today, investors will remain glued to the polls. The slightest shift in voting intentions could have a large impact on the pound.

Euro Investors Eye Barrage Of Data

The mood towards the euro soured on Wednesday, not helped by the latest eurozone pmi data which fell short of analysts’ expectations in some key prints. Whilst the German service sector pmi best expectations, French figures fell short. Eurozone data, as a whole, has been showing tentative signs of stabilising. However, as the service sector pmi data highlights, there are still signs of notable areas of weakness in the bloc’s economy, which is preventing investors from buying into the euro.

Today eurozone economic data will remain in focus as investors look towards a slew of eurozone data, including eurozone GDP, retail sales, employment data and German factory orders. Strong data could boost optimism that the eurozone economy on the slow road to recovery. This could help the euro pare recent losses.

What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 GBP = 1.13990 EUR

Here, £1 is equivalent to approximately €1.14. This specifically measures the pound’s worth against the euro. If the euro amount increases in this pairing, it’s positive for the pound.

Or, if you were looking at it the other way around:

1 EUR = 0.87271 GBP

In this example, €1 is equivalent to approximately £0.87. This measures the euro’s worth versus the British pound. If the sterling number gets larger, it’s good news for the euro. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.