Pound to Euro Week Ahead Forecast: 1.17 Today, 1.19 Next Target

June 30, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: 1.17 Today, 1.19 Next Target

Foreign exchange analysts at MUFG forecast that the Pound to Euro exchange rate (GBP/EUR) will hit selling interest on any gains to 1.19 and retreat to 1.1560 by the end of 2025.

In contrast, Credit Agricole still backs GBP/EUR gains to 1.2050 by the end of the year.

GBP/EUR secured marginal gains during the week, although it failed to hold 2-week highs just above 1.1750 and settled just above 1,1700.

The Pound and Euro both gained net support in global markets from an easing of Middle East tensions and a sustained improvement in risk appetite, liming moves on the cross.

Credit Agricole sees scope for Pound gains on valuation grounds; “We continue to think that EUR/GBP is looking quite overvalued compared to fair value metrics that we estimate based on EUR-GBP rate spread among other drivers. We therefore think that the cross should continue to drift lower in the very near term, especially if risk sentiment continues to recover.

It did, however, add; “That being said, we are also conscious of the risk that a more dovish BoE rhetoric in particular could remain a key downside risk for the GBP.”

Many investment banks have continued to focus on fiscal policy with Germany planning a EUR500bn boost over the next few years.


Deutsche Bank commented; “In the short term, the planned ramp-up in debt-financed spending is remarkably ambitious. The government plans a deficit of more than 3% of GDP as early as this year and almost 4% next year. In light of the front-loading of the fiscal expansion, we raise our growth forecast for 2025 to 0.5%.”

It added; “Not only is the fiscal impulse over this period likely to be more positive than we previously assumed, but the economy is also heading into this fiscal expansion with greater momentum than expected. It would now take a serious exogenous shock or escalation in the trade conflict to scupper the recovery this year."

The UK, however, is still struggling with fiscal policy with a government U-turn on welfare reform adding to long-term reservations and the risk of further tax increases later in the year.

Monetary policy developments will also remain a key area, especially given the Euro-Zone fiscal boost.

There are strong expectations that the Bank of England will cut rates in August with a further cut before year-end.

Nordea commented; “we think the ECB is done in terms of rate cuts.”

It 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.”


In this context, Nordea also commented on fiscal policy; “A looming boost to growth from public spending and investment due to higher German infrastructure and EU defence spending limits downside risks, but we think also higher energy prices have the potential to reduce the odds of the ECB cutting rates further in the current circumstances.”

According to ING; “We are not major subscribers to the view that the ECB will stay on hold until December (a September cut is underpriced in our view), but admit that the latest hawkish communication means market pricing may not be revised significantly to the dovish side at least for some weeks.”

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TAGS: Pound Euro Forecasts