Pound to Euro Forecast: 1.15 Next in Week Ahead

July 14, 2025 - Written by Ben Hughes

STORY LINK Pound to Euro Forecast: 1.15 Next in Week Ahead

The Pound to Euro exchange rate (GBP/EUR) opened the new week lower, seen trending towards the key 1.15 handle.

After holding steady initially, RBC forecasts that Pound Sterling will slide to 1.11 against the Euro at the end of 2026.

Scotiabank, however, expects that the GBP/EUR rate will strengthen to 1.2050 at the end of this year with a further limited advance to 1.22 by the end of 2026.

The Pound was hampered late in the week by weaker-than-expected GDP data. The ONS reported that GDP contracted 0.1% for May after a 0.3% decline the previous month and compared with consensus forecasts of a 0.1% increase.

Attention will now focus on the labour-market and inflation data due in the week ahead.

ING commented; “The UK GDP figures have been incredibly volatile this year, and May's decline looks more like noise than signal. But there are growing concerns about the UK economy, driven by weakness in the jobs market. If next Thursday's payroll figures are bad, then it would pile the pressure on the Bank of England to speed up rate cuts.”

The weaker GDP data is likely to reinforce unease surrounding fiscal policy.


According to MUFG; “Nearer term, the UK government has got itself into a fiscal mess. The election promise not to raise taxes on “working people” meaning no tax increases on income, national insurance or VAT was a big mistake in hindsight and will likely be broken in order to fill the estimated GBP 25bn fiscal hole.”

The bank noted vulnerability in the bond market; “There has also been signs of instability in the Gilt market and we have highlighted before, there has been a steady negative correlation between GBP performance and the direction of long-term Gilt yields underlining the negative investor sentiment toward the Gilt market.”

It added; “Without a credible big step measure (a wealth tax and/or a freeze on income tax thresholds are rumoured) a credibility gap will persist and risk further dangerous market disruptions.”

RBC is also uneasy over fundamentals; We remain less optimistic on the pound than the euro or yen, conscious of the fact that the UK has weaker economic prospects and a more fragile fiscal situation.”

The bank expects that there will a looser monetary policy; “To counter Britain’s economic challenges, the Bank of England is expected to reduce interest rates and hold down the value of the pound. Also, while it is fairly valued versus the dollar, the pound is actually expensive when compared to the currency of the UK’s largest trading partner, the eurozone.”

Scotiabank, however, maintains a positive stance towards the Pound outlook with the BoE holding firm; “The GBP’s fundamental outlook is also solid, as relative central bank policy dynamics favour medium-term upside for the pound. Domestically, lingering inflation pressure will likely force the BoE to deliver less easing than is currently priced by markets, offering the GBP a lift via interest rate differentials.”

RBC is positive on the Euro; “there’s a greater sense of solidarity within Europe these days following Trump’s trade war. This shift is not simply about deepening trade ties within Europe but also strengthening efforts toward a capital-markets union and boosting EU competitiveness in line with recommendations made by Mario Draghi, who served as Italian prime minister and ECB president.”

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TAGS: Currency Predictions Pound Euro Forecasts