Pound Sterling to Euro Forecast: GBP to Weaken to 1.15 vs EUR in 2025

May 13, 2025 - Written by David Woodsmith

STORY LINK Pound Sterling to Euro Forecast: GBP to Weaken to 1.15 vs EUR in 2025

GBP/EUR advanced to a five-week best exchange rate near 1.19. While ING sees potential further Pound Sterling gains ahead of the UK-EU summit, Nordea forecasts a gradual decline against the Euro to 1.15 by late 2025 amid weakening UK employment and cautious BoE signals.

Strong UK retail sales data and buoyant risk appetite continued to underpin the Pound on Tuesday and offset further evidence of a weaker labour market.

The Euro remained on the ropes amid a retreat in defensive support. In this environment, the Pound to Euro (GBP/EUR) exchange rate hit a fresh 5-week high at 1.1900 before a retreat to 1.1890 and will look to break this resistance area in the short term.

ING does see scope for further Pound gains ahead of the May 19th UK-EU summit; “Expect sterling to stay bid ahead of that – potentially even seeing EUR/GBP break below 0.84.” (GBP/EUR Above 1.19.)

Nordea, however, expects that GBP/EUR will fade gradually and weaken to 1.15 by the end of 2025.

There was a stronger than expected reading for retail sales with the BRC data reporting an annual 6.8% increase in like-for-like retail sales for April from 0.9% previously with sales boosted by favourable weather and a late Easter.

UK unemployment increased to 4.5% in the 3-months to March from 4.4% previously and the highest reading since the third quarter of 2021.


April Payrolls declined a provisional 33,000 for April following a 47,000 decline for March and vacancies have been declining for close to three years.

Headline wages growth slowed to 5.5% in the year to March from a revised 5.7% previously, but above expectations of 5.2%.

Markets are not expecting another rate cut at the June meeting.

According to MUFG; “Wage growth remains too high and is not consistent with the BoE’s 2.0% inflation target.”

PwC economist Paige Tao focussed on clear evidence of a slowdown; “If last month’s labour market data hinted at an early response to upcoming employer tax rises, this month’s figures confirm a clearer weakening.”

She added; “As the Bank of England continues to balance inflation risks with growing weakness in the UK growth outlook, today’s figures may indicate a green light for another rate cut at next month’s MPC meeting.”

Wages and inflation implications will remain a key element for the Bank of England.


In comments on Monday MPC member Lombardelli stated that her vote for a cut at the May meeting was finely balance and was justified as an insurance against economic slowdown due to global trade wars.

In contrast, MPC member Taylor stated that the neutral level of interest rates is 2.75-3.00% with rates, therefore still a long way above this level.

According to Taylor, erosion of business confidence has continued and that there is a sense of caution and concern. The remarks were clearly on the dovish side.

MUFG summarised; “Overall the labour market data looks consistent to us with the BoE easing policy but in a careful and gradual manner.”

The German ZEW investor confidence index surged to 25.2 for May from -14.0 previously and above consensus forecasts of -3.5.

The current conditions index, however, edged lower to -82.0 from -81.2 previously which indicated further short-term stagnation.

Danske Bank commented; “Expectations will likely rebound partly due to the less negative signals on trade barriers from the Trump administration like we saw in the Sentix indicator. Focus will thus centre on whether the current situation has deteriorated due to the tariff uncertainty.”

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: Currency Predictions Pound Euro Forecasts