Pound to Euro Forecast: Solid GBP Support close to 1.15

July 18, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Forecast: Solid GBP Support close to 1.15

The Pound to Euro exchange rate (GBP/EUR) jumped to 1.1565 after the UK jobs data, before a retreat to just below 1.1540, with the Pound still unable to secure sustained support.

The latest jobs data curbed fears over severe deterioration in the labour market and rapid Bank of England rate cuts, but overall Pound confidence remains fragile.

ING commented; “EUR/GBP reaction to the data has been modestly negative, but given the bar for a BoE dovish repricing is now higher, the 0.870 level should work as a sturdier resistance.”

(The bank expects solid GBP/EUR support close to 1.1500).

BNP Paribas has a year-end GBP/EUR forecast of 1.15.

MUFG does not expect durable Pound support; “The pound may benefit from this over the short-term but we still see scope for the BoE being more active relative to the ECB and risks remain higher through the remainder of the year of the BoE turning more active in cutting than currently priced.”

According to the ONS, the UK unemployment rate increased to 4.7% in the three months to May from 4.6% previously. This was above consensus forecasts of 4.6% and the highest rate for close to four years.


The payrolls data recorded a provisional decline of 41,000 for June, but the May decline was revised to a 25,000 compared with the flash estimate of a 109,000 slide.

ING sees scope for an upward revision to the latest data. It added; “a sharp decline in worker numbers would be totally inconsistent with the official redundancy numbers we get each week from the government, which have shown no discernible increase over the past few months.”

Vacancies fell by a further 56,000 and have fallen for the last 36 months. The increase in headline average earnings slowed to 5.0% in the three months to May from 5.4% previously while underlying growth also slowed to 5.0% from 5.3% with both figures in line with market expectations.

ING added; “The bottom line is that the jobs market is undoubtedly cooling – and judging by comparable vacancy data from hiring agency Indeed, it is cooler than in other major economies. But equally, the latest data shows things aren’t snowballing, which is what we tend to see during recessions.”

Deutsche Bank’s chief UK economist Sanjay Raja noted weaker demand for labour; “This will continue to see unemployment rise – but we think this will be a slow grind higher as opposed to a whipsaw higher. For the MPC, despite the bump higher in inflation, the loosening in labour market should give the BoE reason to proceed with a gradual dial down of restrictive policy.”

He added; “A ‘gradual and careful’ approach seems appropriate for now. And we do not think that the bar for faster rate cuts has been met just yet.”

ING expects Bank of England rate cuts in August and November with two further cuts next year.


According to MUFG; “With wage growth slowing and the labour market deteriorating, a rate cut on 7th August is very likely and is close to 90% priced. There is very little priced for an additional cut in September and that pricing makes sense following the CPI and jobs data this week.”

XTB research director Kathleen Brooks was downbeat on the outlook; “The relentless rise in the unemployment rate is a further sign that the UK economy is creaking and could become the sick man of Europe.”

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TAGS: Pound Euro Forecasts