Pound to Euro Rate Drifts as GBP Tipped for Decline to 1.15 EUR

June 17, 2025 - Written by Tim Boyer

STORY LINK Pound to Euro Rate Drifts as GBP Tipped for Decline to 1.15 EUR

After sliding to 7-week lows just below the 1.1700 last week, the Pound to Euro exchange rate (GBP/EUR) recovered to 1.1775, but failed to hold the gains and retreated to 1.1730 on Monday.

Danske Bank maintains a downbeat stance on the Pound; “we stay negative on GBP. An investment environment characterised by elevated uncertainty and a positive correlation to a USD negative environment, in our view, favours a weaker GBP. Tentative signs of a weaker growth outlook for the UK economy also acts as a headwind for GBP.

It added; “We therefore expect EUR/GBP to move higher towards 0.87 on a 6-12-month horizon. (GBP/EUR decline to 1.1500).

Domestically, there is an important inflation release and the Bank of England policy decision this week which will be important for Pound sentiment.

The G7 summit and Federal Reserve policy meeting will also be very important for global markets.

In the near term, the Israel-Iran conflict will also be watched closely with a focus on energy prices and equities.

The UK FTSE 100 index posted tentative gains on Monday which limited Pound selling while oil prices edged lower.


XTB market analyst Kathleen Brooks commented; "Financial markets are very good at absorbing geopolitical risk, and Opec+’s supply boost is also helping to cushion the blow.”

She added; "Back in 2022, when Russia invaded Ukraine, the oil price rose by more than 80% in the weeks and months before Russia invaded Ukraine, however, we may not cross the $100 per barrel level this time."

Natural gas prices have increased which will tend to put upward pressure on UK retail energy prices if the gains are sustained or extended.

Rhetoric from global leaders will be watched very closely. According to XTB’s Brooks; “The EU is scheduled to have a meeting about the conflict this Tuesday, and this week’s G7 meeting is likely to be dominated by the situation."

The ECB has played down the deflationary risks posed by a stronger Euro which will tend to support the currency.

According to ECB Vice President de Guindos; "Markets have understood perfectly well what the President said about being in a good position. I think that markets believe and discount that we are very close to our target of sustainable 2% inflation over the medium term."

According to Nordea; “Balancing the medium-term upside risks and near-term downside risks, we still expect the ECB to be done in terms of rate cuts, with risks tilted towards a further cut.”


Markets will be monitoring energy prices closely as any further surge in prices would undermine the economy, but also tend to put upward pressure on inflation.

Domestically, there has been further evidence of a more subdued housing market.

Rightmove reported that house prices declined 0.3% for June compared with historical increases of 0.4% for the month.

Rightmove’s Colleen Babcock commented; “It appears that we’re now seeing the decade-high level of homes for sale, and the recent stamp duty increases in England, have a delayed impact on new sellers’ pricing. Prices have fallen this month after the new records set in April and May.”

The Bank of England Monetary Policy Committee (MPC) will meet on Monday to deliberate over the policy decision ahead of Thursday’s policy announcement.

The latest inflation data will be released on Wednesday.

There are strong expectations that the MPC will leave interest rates at 4.25% with guidance crucial for the Pound.

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TAGS: Pound Euro Forecasts