Pound-to-Euro Week Ahead Forecast: 1.154 Today, 1.15 Next Target

July 21, 2025 - Written by Tim Boyer

STORY LINK Pound-to-Euro Week Ahead Forecast: 1.154 Today, 1.15 Next Target

The Pound to Euro exchange rate (GBP/EUR) is facing renewed downside pressure in the near-term outlook, with major banks including Goldman Sachs, BNP Paribas, and UBS forecasting further losses into 2025 and 2026 amid diverging monetary policies and UK fiscal uncertainty.

Foreign exchange analysts at Goldman Sachs forecast that the Pound-to-Euro rate will slide to 1.09 at the end of 2026.

BNP Paribas and UBS both expect that GBP/EUR will trade at 1.15 at the end of 2025 with a retreat to 1.1365 at the end of next year.

Credit Agricole is still backing Pound gains, but has cut the end-2025 forecast to 1.1765 from 1.2050 previously.

The Pound to Euro (GBP/EUR) exchange rate dipped to 3-month lows at 1.15 during the week before a tentative recovery to 1.1540.

According to Credit Agricole; “A key driver of the currency’s underperformance seems to be the renewed frontloading of BoE easing expectations in recent weeks.”

The headline UK inflation rate increased to 3.6% from 3.4% with the core rate at 3.7% from 3.5%.


The jobs data recorded a 41,000 decline in payrolls for June, but the May decline was revised to 25,000 from the flash reading of 109,000, easing fears over a severe deterioration in the labour market.

Markets remain confident that the Bank of England (BoE) will cut interest rates at the August meeting, but there is notable uncertainty over the medium-term outlook.

Berenberg expects the BoE will face tough decisions due to stubborn inflation; “The UK is again becoming an international outlier to the upside on inflation.”

It added; “the more hawkish monetary policy committee members will worry that companies and workers are assuming that inflation will remain high, weakening the downward pull on prices from slack in the labour market.”

RBC Capital Markets commented; “while we expect the MPC to deliver a rate cut at the August meeting, we think that the continued stickiness of services inflation in particular will stop them from translating that recent dovish rhetoric into a change in their ‘gradual’ guidance.”

Growth and fiscal policy will be key elements, especially as it will feed through into monetary policy.

BNPP is cautious over the growth outlook; “we do not see UK fiscal policy providing a growth boost any time soon – indeed with the government finding it difficult to push through spending cuts the risk of tax increases is rising.”


The bank still expects that global developments will be more important.

It added; “In the absence of bullish domestic factors we think the GBP could be especially sensitive to a turn in global growth expectations which we view as a potential source of vulnerability for the GBP.”

Goldman Sachs expects a BoE rate cut in August, but has dropped the call for another cut in September.

It now expects cuts at each meeting from November to March with terminal rate at 3.00%.

According to the bank; “We have some sympathy for the building negative sentiment in Sterling, and see value in further downside in the currency on European crosses from here.”

The ECB will hold its latest policy meeting in the week ahead with expectations that the deposit rate will be held at 2.0%.

Nordea commented; “Risks of lower rates have not gone away, but the pricing of further rate cuts has receded and we continue to see no further cuts from the central bank.”

According to Danske; “We expect a final 25bp cut to 1.75% in September due to a weakening services sector, slowing wage growth and elevated trade uncertainty though risks lean towards no cut.”

UBS commented; “We expect the EUR to be stronger than the pound over the forecast horizon on a spot basis, as the ECB nears the end of its easing cycle, while the Bank of England is expected keep easing gradually into 2026.”

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TAGS: Pound Euro Forecasts