Pound to Euro Week Ahead Forecast: 1.2160 by End of 2025

June 1, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: 1.2160 by End of 2025

Wells Fargo forecasts that the Pound to Euro (GBP/EUR) exchange rate will strengthen to 1.2160 at the end of 2025 amid Euro vulnerability.

Nomura, however, expects that GBP/EUR will retreat to 1.1375 given reservations surrounding the UK outlook.

US trade developments will inevitably have an important impact on both currencies.

GBP/EUR briefly hit 8-week highs close to 1.1970 during the week but failed to hold the gains and dipped back below the 1.1900 level with a big impact from Euro position adjustment during the week.

There were no major UK developments during the week with global trade events again dominating.

After backing away from the threat to impose 50% tariffs on the EU on June 1st, tariffs remained in the headlines as a US court ruled that reciprocal tariffs were unconstitutional. This ruling was put on hold through appeal and the dispute could be heading for the Supreme Court.

The tariffs will remain in place while the court process is completed, but uncertainty has increased even further with trade negotiators in an unenviable position.


There is less immediate pressure on the EU to negotiate while the UK-US outline deal could now be seen in a less favourable light if Administration is forced to take an alternative approach.

Credit Agricole commented; “The resilience of market risk sentiment will play an important role as well. It should, in turn, depend on the latest news flow surrounding the legal drama on tariffs and prospects for further abatement of the global trade war stagflation threat. It would take further improvement of global risk appetite to help the high-yielding GBP outperform again.”

In comments during the week, Bank of England Governor Bailey continued to emphasise uncertainty while MPC member continued to call for an easier monetary policy due to downside economic risks.

Nomura is uneasy over the Pound fundamentals; “We are more sceptical about the ability of GBP to benefit as much from USD weakness than other currencies. The stagflationary issues that have started to plague USD have been prevalent in the UK for some time , fiscal concerns are more likely to become a hindrance for the currency, external balances are broadly negative, and GBP is already showing signs of overvaluation.”

Consensus forecasts are for another ECB rate cut this week which would take the deposit rate down to 2.00%, but there is a high degree of uncertainty over the tone and guidance.

RBC Capital Markets commented; “We expect the ECB will cut rates by 25bp to 2.00% at its June meeting but expect the decision to be contentious. We think there are strong divisions on the Governing Council and would be very surprised if the decision was unanimous.”

Nordea expects this will be the final cut; “The ECB is set to cut rates again, but we expect the central bank to take a more wait-and-see approach towards the future, and ultimately decide against cutting rates further. New staff forecasts will shed more light on the risk picture.


It added; “Our thinking is that the medium-term upside risks to growth and inflation will offset the downward risks coming from tariffs in the near term, and will guide the ECB towards the sidelines after next week’s cut.”

Wells Fargo notes recent backing “The euro has benefited over the past several weeks as an alternative to the greenback amid an uncertain trade and policy environment.”

It does not expects support will be sustained; “However, once those supportive forces for the euro wane, the currency will, in our view, still be faced with the reality of uninspiring sentiment and confidence surveys, an underwhelming growth performance, and a European Central Bank that should still lower policy interest rates modestly further.”

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TAGS: Currency Predictions Pound Euro Forecasts