Pound to Euro Forecast: GBP Battles to Match Turbocharged EUR

July 1, 2025 - Written by James Fuller

STORY LINK Pound to Euro Forecast: GBP Battles to Match Turbocharged EUR

The Pound-to-Euro exchange rate (GBP/EUR) dipped to 2-month lows close to 1.1640 in early Europe on Tuesday before a recovery to 1.1655.

The Euro has continued to attract support with strength on major crosses amid a loss of confidence in the dollar.

UK political developments will be monitored on Tuesday with a key government welfare-reform vote on Tuesday while speakers at the ECB conference will be potentially important.

According to ING; “EUR/GBP could trade over 0.86 should today's vote reject the proposed reform.” (GBP/EUR below 1.1630).

SocGen considered the technical outlook and sees scope for further gradual Pound losses; "The pair is unfolding a brief pause; recent pivot low of 0.8500/0.8480 is an important support near term. Overcoming June high of 0.8575 can lead to an extension in rebound towards 0.8610 and projections at 0.8640." (A target of 1.1575 for GBP/EUR)

The House of Commons vote on welfare reform is scheduled for Tuesday. Despite concessions, there are still reports that a sizeable number of Labour MPs will vote against the Bill. The government may well survive the vote, but strong opposition would reinforce concerns over the medium-term outlook.

ING commented; “The government has already been forced to make about £4bn of concessions to get the bill through – although its passage is not guaranteed. Any failure to get the bill through could hit sterling and gilts on the view that further concessions will have to be made at a time when there is no fiscal headroom.”


Nationwide reported that UK house prices declined 0.8% for June after a 0.4% increase the previous month and compared with expectations of a 0.2% decline. The annual increase slowed to 2.1% from 3.5% previously.

Nationwide's Chief Economist Robert Gardner commented; “The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April.”

He added; “Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive.”

The UK PMI manufacturing index was unrevised at 47.7.

There was further upward pressure on costs, although selling prices increased at the slowest rate for three months.

Rob Dobson, Director at S&P Global Market Intelligence commented; “Although the downturn in UK manufacturing continued in June, the latest PMI survey provides signs of conditions stabilising.”

He added; “That said, any hoped for stabilisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects.”


The headline Euro-Zone inflation edged higher to 2.0% for June from 1.9% previously and in line with consensus forecasts.

The core rate also met market expectations with an unchanged rate of 2.3%.

ING commented; “From the ECB side, the market prices one further 25bp ECB cut to 1.75% in December. It seems unlikely that President Lagarde will want to interfere in that pricing today.”

According to MUFG; “Recent strong gains for the euro are starting to attract more attention from ECB policymakers.”

MUFG also considers that the bank is liable to be more dovish; “Inflation is still roughly in line with the ECB’s forecasts but disinflationary pressures support our forecast for two further cuts this year with the next one to be delivered in September.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts