GBP/EUR Forecast: Pound Buoyed vs Euro by Hawkish BoE Rate Cut

May 8, 2025 - Written by Tim Boyer

STORY LINK GBP/EUR Forecast: Pound Buoyed vs Euro by Hawkish BoE Rate Cut

The Pound Euro (GBP/EUR) exchange rate drifted higher on Thursday following the Bank of England’s (BoE) latest interest rate meeting.

At the time of writing, the GBP/EUR was trading at around €1.1796, up roughly 0.3% from Thursday’s opening levels.

The Pound managed to edge higher against most major currencies on Thursday with markets responding positively to the latest signals from the Bank of England.

While a 25 basis-point rate cut had been widely expected, the breakdown of the Monetary Policy Committee’s (MPC) vote offered some support to Sterling.

Rather than a broad consensus, the decision was more divided. Five members backed the cut, two favoured holding rates steady, and two pushed for a larger 50 basis-point reduction.

This unexpected split hinted at a more cautious approach to loosening policy than markets had priced in.

Sterling also benefited from growing optimism around a trade agreement between the UK and the United States, which added to the upbeat sentiment during Thursday’s session.


The Euro (EUR) found modest support on Thursday and was lifted by a pair of unexpectedly strong economic indicators out of Germany.

Investors responded positively as March’s trade surplus in the Eurozone’s largest economy expanded significantly, reaching €21.1 billion, well above both February’s €18.0 billion figure and the €19.1 billion analysts had forecast.

Adding further momentum, Germany’s industrial production figures also surprised to the upside.

Output surged by 3% in March, rebounding sharply from a -1.3% drop the previous month and beating expectations of a 0.8% increase.

These results boosted confidence in Germany’s economic outlook, which helped to strengthen the Euro against several major currencies.

With no major economic releases expected from either the UK or the Eurozone on Friday, broader market sentiment is likely to steer the Pound Euro exchange rate.

Risk appetite will likely guide the pair’s direction, but comments from Bank of England Governor Andrew Bailey could introduce additional volatility.


Should Bailey suggest that more rate cuts are on the table for the latter half of the year, the Pound’s recent gains could come under pressure as the week wraps up.

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TAGS: Pound Euro Forecasts