Pound to Euro May Forecast: FTSE 100 Index Revival Underpins Sterling

May 2, 2025 - Written by Tim Boyer

STORY LINK Pound to Euro May Forecast: FTSE 100 Index Revival Underpins Sterling

The Pound to Euro (GBP/EUR) exchange rate found support below 1.1720 on Wednesday and rallied to near 1.1770 on Thursday, close to 3-week highs.

Many European markets were closed for the Labour-Day holiday which dampened activity with markets also waiting for the UK local election results.

Equity markets, however, held firm on Thursday which also boosted the UK currency.

The FTSE 100 index was little changed on the day, but has rallied for 13 successive days with a strong rebound of over 12% from April lows.

According to ING, if GBP/EUR can sustain a move above the 1.1765 area, there is scope for gains to 1.1860.

Speculation over a more dovish Bank of England stance, however, may curb near-term Pound support.

HSBC expects GBP/EUR will trade around 1.16 at the end of the second quarter.


ING considers that the government moves to foster a closer relationship with the EU will also help underpin the Pound.

It notes a UK-EU Summit on May 19th and expects further progress towards easing trade barriers during the summer.

According to ING; “The design from the Labour government here is that a closer relationship with Europe could see the Office for Budget Responsibility 'score' UK growth prospects higher in November and give Chancellor Rachel Reeves more room to spend.”

The latest evidence on the UK economy was mixed and Bank of England policy will come into greater focus ahead of next week’s policy decision.

Morgan Stanley commented; "We think that the term 'gradual and careful' will be removed from the guidance, in order for the BoE to leave itself space to accelerate cuts if needed.”

The final manufacturing PMI index was revised to 45.4 for April from the flash reading of 44.0 and compared with the March reading of 44.9.

Business optimism dipped to a 29-month lows while there was strong upward pressure on costs and output prices increased at the fastest rate for 26 months.


Rob Dobson, Director at S&P Global Market Intelligence commented; “The start of the second quarter saw UK manufacturing buffeted by adverse global market conditions, rising cost pressures, deteriorating supply chains and increased trade uncertainty.”

He added; “April saw further contractions in output, new orders and exports, as well as a slump in business confidence to its lowest ebb since November 2022.”

According to the latest Institute of Directors (IoD) survey, business confidence improved to -51 for April from -58 in March.

UK mortgage approvals declined to 64,300 for March from a revised 65,100 previously, but slightly above expectations of 64,000.

There was a surge in overall net lending to £13.8bn for the month from £4.6bn as buyers rushed to beat the changes to stamp duty from April 1st.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts