Pound to Euro Forecast 2025: Year-end GBP/EUR Target of 1.19

June 25, 2025 - Written by Tim Boyer

STORY LINK Pound to Euro Forecast 2025: Year-end GBP/EUR Target of 1.19

The Pound-to-Euro exchange rate (GBP/EUR) found support close to 1.1660 on Monday and recovered strongly to 1-week highs just above 1.1730 on Tuesday.

Overall risk appetite has strengthened on Tuesday with a positive response to the Iran-Israel ceasefire and relief that the US did not respond to the missile attack on its key Qatar airbase.

Equities made gains and there were sharp declines in energy prices, a double boost for the Pound.

ING commented; “Pro-cyclical currencies have a negative sensitivity to oil prices.”

UBS still sees scope for GBP/EUR to strengthen to 1.1900 this year before a net retreat next year.

Nordea forecasts GBP/EUR at 1.1630 at the end of 2025.

According to IG chief market analyst Chris Beauchamp; “There are still hurdles to navigate, most notably the 8 July deadline for trade deals, but for the moment the market thinks that there will be some kind of fresh extension. Slumping oil prices have negated some inflation fears for now, and with two Fed governors calling for rate cuts the overall tone continues to be supportive for risk assets.”


The Euro, however, is also sensitive to energy prices and ING commented; “the drop in oil prices means concerns about the erosion of EUR fundamentals are dissipating.”

There will also be relief that natural gas prices have declined sharply on Tuesday.

The German IFO business confidence index strengthened to 88.4 for June from 87.5 the previous month and just above consensus forecasts of 88.1.

There was a marginal gain for the current conditions index with a stronger advance for the expectations index.

According to the IFO; “the German economy is slowly building confidence.”

There was still a very mixed outlook. In manufacturing, for example, the survey commented; “the business climate improved marginally. While companies were noticeably more optimistic about the coming months, current business performance has been less favorable. Companies remain very dissatisfied with their order books.”

According to Nordea, yield risks to the Euro have declined; “we think the ECB is done in terms of rate cuts.”


Nordea added; “We do think risks remain tilted towards another cut for now, as many downside risks remain, not least due to trade policy uncertainty. However, trade policy is only part of the story and there are upside risks as well.”

The UK Composite PMI Index rose to 50.7 from 50.3 in May.

RSM chief economist Thomas Pugh commented; "Overall, the PMIs suggest that the biggest hit to the economy was in April and things are now starting to recover. That said, the subdued level of the PMIs is still pointing to near stagnation.”

Even though there will be relief over the sharp decline in natural gas prices, the Bank of England (BoE) will be wary over inflation trends.

According to Kantar the inflation rate for groceries increased to 4.7% for the four weeks to June 15 from 4.1% previously and the highest reading since March 2024.

BoE external member Greene commented on the outlook; “I continue to think the risks remain two-sided but skewed to the downside on growth and to the upside on inflation. This is an uncomfortable place to be for a central banker.”

She also pointed to a high degree of uncertainty, especially given Middle East stresses and added; “It’s unlikely that the uncertainty will be resolved any time soon. I therefore think a careful and gradual approach to removing monetary policy restrictiveness continues to be warranted.

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TAGS: Currency Predictions Pound Euro Forecasts