Pound to Euro Forecast: EUR and GBP Sterling Both Secure Data Boosts

May 23, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Forecast: EUR and GBP Sterling Both Secure Data Boosts

The Pound-to-Euro exchange rate (GBP/EUR) recovered strongly from lows around 1.1825 on Thursday, but was again unable to sustain a brief move above the 1.1900 level and settled just below this level.

The Pound and Euro both gained support from Friday’s data, limiting GBP/EUR moves.

The Pound may have greater scope for gains on pure economic grounds, but the Euro looks better placed structurally given scope for capital inflows.

This 1.19 area remains a key resistance area for the pair and equates to 0.84 for EUR/GBP.

Credit Agricole commented; “After five weeks of lower weekly highs, lows and closes, EUR/GBP is struggling to extend those trends to a sixth week as the pair has found strong support around 0.84.”

Nevertheless, it added; “Any close in EUR/GBP below last week’s could thus keep the downside momentum alive.”

The bank still sees scope for GBP/EUR gains to 1.2050 within the next few weeks.


On Friday, Germany reported that GDP increased 0.4% for the first quarter compared with consensus forecasts of 0.2% and followed a 0.2% contraction for the fourth quarter of 2024.

ING commented; “All in all, today’s numbers finally brought back an almost forgotten relic from the past: the German economy can still surprise to the upside. Even if the first quarter performance is clearly the result of one-offs and doesn’t look sustainable (yet), it shows that after the recent downgrading of growth forecasts for this year, the next revision is likely to be to the upside.

Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, also expects a limited setback for the second quarter.

He still expressed some optimism; “A cyclical component is also observable in manufacturing - as early indicators up to May show - and the strength in consumption is what could have been expected for some time given real wage increases. Therefore, there are several reasons to believe that the upward trend will continue here.”

Following the latest minutes, there are still expectations that the ECB will continue to cut interest rates.

MUFG noted; “The tone of the minutes pointed to increased confidence in inflation returning to target, which if maintained, certainly points to the scope for the ECB to lower the policy rate into accommodative territory.”

It added; “Two more rate cuts seems likely and if global conditions worsen or EU-US trade conflicts emerge, three cuts would be very feasible.”


Rabobank noted some evidence of hawkish ECB elements, but added; “we do not believe that this changes the outlook for the June meeting: a rate cut is still very likely.”

Overall yield spreads will tend to limit Euro support, but there is also evidence of further inflows into the Euro.

According to ING; “We think the euro is continuing to benefit from being the most liquid alternative to the dollar. There is also evidence that portfolio re-allocation is helping the euro.”

UK data was also broadly favourable with retail sales increasing 1.2% for April compared with consensus forecasts of a 0.3% gain, although the March increase was revised to 0.1% from 0.4%.

The GfK consumer confidence index also improved to -20 for May from -23 the previous month.

The data boosted expectations over the short-term UK outlook.

Credit Agricole commented; “The GBP was still able to fare better than the EUR yesterday, as a material improvement in the UK flash PMI for May contrasted with an unexpected deterioration in the same marks for the Eurozone.”

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