The pound-euro (GBP/EUR) exchange rate is rising modestly after recent losses.
The pound is rising despite data showing the UK economy barely grew at the end of 2025, highlighting that growth was already weak before the Iran conflict began.
Meanwhile, higher UK shop price inflation suggests rising costs are beginning to feed through supply chains.
The euro is under pressure after eurozone inflation jumped sharply to 2.5% YoY, but softer core and services inflation reduced pressure on the ECB to respond aggressively.
While markets still expect ECB rate hikes this year, weaker growth across Europe and a less convincing inflation backdrop are limiting support for the single currency.
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