Pound to Euro Forecast: Israel Strikes Pose GBP and EUR Risks

June 15, 2025 - Written by Tim Boyer

STORY LINK Pound to Euro Forecast: Israel Strikes Pose GBP and EUR Risks

The Pound to Euro exchange rate (GBP/EUR) has been under pressure this week and extended losses in Asia on Friday with 7-week lows just below 1.1700 before a recovery to 1.1750.

Geo-political developments will inevitably remain important in the short term with choppy trading, especially as there will be position adjustment into the weekend.

The Euro and Pound are both vulnerable to some extent if geo-political fears intensify, especially if oil prices surge further.

ING sees scope for further GBP/EUR losses; “In line with our call, EUR/GBP has broken above 0.8500, and prolonged geopolitical turmoil in the Middle East should drive further gains in the pair, where we retain a bullish bias.”

It expects a GBP/EUR retreat to 1.1635 at the end of this year.

According to Scotiabak; “The fundamental outlook for EUR remains supportive, given the shift in the outlook for relative central bank policy as the ECB pivots toward a neutral stance.”

The Pound has been undermined by weaker than expected economic data this week and there was additional pressure overnight as risk appetite took a hit from Israel’s military strikes on Iran.


Israel launched strikes against Iran’s nuclear facilities and killed two key nuclear scientists as well as senior Iranian Revolutionary Guards officers.

Oil prices surged over 8% on the day while there was strong demand for defensive assets.

The Pound tends to be vulnerable when risk appetite deteriorates and equity markets lose ground.

The overall moves were still contained, limiting potential Pound selling. The spike in oil prices will also tend to undermine Euro support in global markets, limiting scope for GBP/EUR losses.

According to ING; “The euro generally dislikes geopolitical shocks leading to higher energy prices and has therefore detached from JPY and CHF in early price action after the Israeli strike on Iran.”

ING also noted further complications for the ECB and the potential for a final rate cut to be delayed until the fourth quarter to assess underlying inflation concerns.

It added; “we’ll likely need to wait for next week’s ECB speakers to get a better sense of what this all means for monetary policy. And given the fast-moving geopolitical situation, it is definitely too early to draw conclusions just yet.”


Hawkish ECB rhetoric would provide net Euro support.

The Bank of England (BoE) will announce its latest policy decision next week with expectations that rates will be held at 4.25%.

There has been evidence of a weaker UK economy which will have some impact on the BoE thinking while inflation evidence has been mixed.

It is likely that at least two committee members will vote for a second successive rate cut.

If rates are held at 4.25%, guidance and rhetoric will be crucial.

Barclays commented; “If the outcome of June's meeting is largely a foregone conclusion, the path of the market into the August forecast round comes down to the market's assessment of the risk around alterations to guidance."

Danske focussed on UK economic vulnerability; “The data yesterday follows weaker than expected labour market data out earlier this week and highlights that the UK economy is experiencing more underlying weakness following a strong start to the year.”

Credit Agricole noted the risk that fiscal conditions will tighten; “Ultimately, a more difficult task may still loom in the months to come if tax hikes become needed to balance the books, which could be hard to resist if public borrowing keeps overshooting and/or UK growth does not prove as resilient as expected.”

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TAGS: Currency Predictions Pound Euro Forecasts