Pound to Euro Mid-Week Forecast: Sterling Bolstered on Closer UK-EU Hopes

April 30, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Mid-Week Forecast: Sterling Bolstered on Closer UK-EU Hopes

The Pound to Euro exchange rate (GBP/EUR) hit 3-week highs around 1.1780 in Europe on Tuesday before settling around 1.1770. Hopes for closer UK-EU ties have continued to underpin the Pound Sterling in global markets.

UK equities edged higher in London trading which also helped support Sterling.

Ramifications of the aggressive US trade policies are continuing to reverberate globally.

Although the UK is pursuing a trade deal with the US, a key impact has been evidence of looking to forge close ties with the EU.

According to sources, the UK and the European Union are set to sign a formal declaration committing to “free and open trade”

The document has been drawn up ahead of a May 19th UK-EU summit to discuss economic and defence issues.

The draft stated; “We confirmed our shared principles of maintaining global economic stability and our mutual commitment to free and open trade,” the draft noted. It added that the sides would continue working “on how we can mitigate the impact of fluctuations in the global economic order.


Enrique Diaz Alvarez, chief financial risk officer at Ebury commented; “We think that sterling's relative underperformance vs the euro is not justified by fundamentals, including high interest rates, relative economic insulation from Trump's tariffs, and prospects for closet integration with the European Union."

Monetary policy will also be an important element ahead of the May 8th Bank of England policy decision.

There are still very strong expectations of a 25 basis-point rate cut, but speculation over a larger cut or dovish guidance from the policy committee curb Pound buying in the near term.

CIBC commented; “we are increasingly wary of the bank, considering the need to get to ‘neutral’ somewhat faster, (which we consider to be at 3.50%) should growth challenges persist, and inflationary pressures prove less aggressive than feared.”

ING notes dovish rhetoric from the ECB and that further rate cuts would help curb Euro strength.

It added; “Even if that is not the primary goal, it would surely be a welcome side effect for tariff-hit eurozone exporters. After all, a stronger trade-weighted euro is disinflationary and allows the ECB to err on the dovish side.”

Expectations of a dovish ECB policy will limit any potential Euro support.


Markets will also be monitoring euro-zone economic data closely. The first-quarter GDP data will not have any tariff impact with domestic developments dominating.

ING commented; “A quarter-on-quarter GDP print for the first quarter below the consensus 0.2% tomorrow could be a trigger for unwinding some euro longs, and today’s economic confidence figures can also have some FX impact.”

Euro-zone business confidence dipped to 93.6 for April from 95.0 the previous month with industrial and consumer confidence both edging lower for the month.

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TAGS: Pound Euro Forecasts