The pound-euro (GBP/EUR) exchange rate is edging modestly lower but remains around a 4-month high.
The pound has been supported in recent sessions by improved global risk sentiment, easing UK fiscal concerns, and signals from Prime Minister Starmer of closer ties with Europe.
UK services PMI was revised lower to 51.4 in December, while service-sector inflation pressures intensified, complicating the BoE’s easing path.
The euro is higher despite eurozone PMI data showing slower December growth, though 2025 ended with the strongest quarterly expansion in over two years, driven by resilient services activity.
German inflation was cooler than expected at 1.8% YoY, below the 2% forecast.