Pound to Euro Forecast: GBP Fails to Crack 1.19 Resistance

May 20, 2025 - Written by Tim Boyer

STORY LINK Pound to Euro Forecast: GBP Fails to Crack 1.19 Resistance

The Pound to Euro (GBP/EUR) exchange rate failed to break resistance around 1.19 on Monday and is trading close to 1.1880. UK inflation data is likely to be pivotal over the next 24 hours and will determine whether GBP/EUR can break higher or will be subjected to a deeper correction.

ING commented; “Brace yourselves. April is always a crazy month for UK inflation. And this year’s data, released on 21 May, is set to be even crazier.”

April remains a key month given the annual price increases for the month, especially in the utility sector, and retail energy prices increased in April

There is a risk of substantial moves in UK yields and the Pound.

Consensus forecasts are for an increase in the headline inflation rate to 3.3% from 2.6% with the core rate at 3.6% from 3.4%.

In comments on Tuesday, Bank of England chief economist Pill stated that he considers a quarterly rate of rate cuts is too fast given underlying inflation concerns which is why he voted against the May rate cut. The latest inflation data, especially for services, will have an impact on BoE thinking.

ING added; “Everything from energy price hikes and a 25% increase in water bills (ouch) to substantial rises in new car road tax looks set to take headline inflation almost a percentage point higher from the 2.6% rate recorded in March.”


According to Goldman Sachs; “We expect services inflation to rise to 5.10% (from 4.72% in March).

ING, however, remains confident that services-sector inflation will decline steadily; “Whatever happens, though, we think the news on services inflation is about to get better. We believe it will be half a percentage point lower by June (roughly 4.2%), well below the BoE’s forecasts, which see it hovering around 5% into the summer.”

The bank expects a longer BoE rate-cutting cycle; “We think this more dovish inflation story is more likely to be reflected in a lower end-point for Bank Rate. Markets are pricing the terminal rate at 3.7%; we're expecting rates to eventually fall to 3.25%.”

Political reaction has been strong to the UK-EU deal, but the market impact has been limited.

ING commented; “Yesterday's UK-EU did not prove a game changer for sterling after all, but it still should prove mildly supportive for sterling this summer.”

Rabobank noted closer alignment with the EU; “the deal signals a clear trajectory: the UK is moving towards a relationship with the EU that resembles Switzerland’s. It is formally sovereign, yet locked in ongoing negotiations and deeply enmeshed in EU frameworks across the entire economy.”

The UK will gain improved and simplified access to the EU market for agricultural and food products.


According to Rabobank; “it can only be seen as limiting the damage of Brexit rather than a macroeconomic game changer.”

Rabobank also noted potential contradictions; “these conditions also mean that the UK cannot strike a trade deal with the US involving food and agriculture, unless there is no transshipment of goods, or unless the European Union signs a trade deal with the US that solves this issue. Is the UK about to sign a series of conflicting bilateral trade deals?”

The Euro-Zone recorded a current account surplus of EUR51bn for March from EUR41bn the previous month and EUR30bn last year.

The surplus amounted to EUR438bn in the 12 months to March and 2.9% of GDP.

The current account surplus and net capital inflows will provide net Euro support.

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TAGS: Pound Euro Forecasts