Pound to Euro Forecast: Held Below 1.1630 Resistance, Next Target 1.13

July 22, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Forecast: Held Below 1.1630 Resistance, Next Target 1.13

The Pound to Euro exchange rate (GBP/EUR) remains capped below 1.1630 ahead of key UK and Eurozone PMIs and the ECB decision, with MUFG targeting a move to 1.13 amid UK fiscal risks and potential ECB unease over recent Euro strength.

The Pound to Euro rate consolidated just above 1.1550 with no further move to test the 1.1500 level while the pair has remained blocked at 1.1630.

MUFG noted that GBP/EUR has been held below this 1.1630 resistance for the longest period since early 2024, and it maintains a Pound Sterling target against the Euro of 1.13.

The UK and Euro-Zone PMI business confidence data this Thursday, together with the ECB rate call, will be important in shaping the overall Pound and Euro debate.

EU/US trade developments will also continue to be monitored closely.

The ECB will announce its latest policy decision on Thursday with consensus forecasts that the deposit rate will be left at 2.00%.

The central bank is often reluctant to change interest rates at the summer meetings, especially with trading volumes declining during the holiday period.


The Euro to Dollar (EUR/USD) exchange rate has retreated from 45-month highs at 1.1830 seen at the beginning of July, but there will still be some concerns over the implications of currency strength within the central bank.

A stronger Euro will hamper exports and put some downward pressure on cost pressures which could revive disinflation fears.

As far as the latest PMI business confidence data is concerned, markets are expecting a small net improvement. The central bank will be watching cost and pricing pressures within the data.

In last month’s survey manufacturing companies reported lower prices, but charges in the services sector continued to increase at a rate above the long-term average.

MUFG commented; “We are expecting the ECB to repeat the message from the June policy meeting that that the stronger EUR continues to pose downside risks to growth alongside higher tariffs via their negative impact on exports, while posing downside risks to the inflation outlook as well.”

Looking at the currency impact, it added; “At best any comments from the ECB displaying more unease over the recent sharp strengthening of the euro at this week’s policy meeting may have a dampening impact on the euro’s upward momentum, but are unlikely to trigger a sustained reversal of the current strengthening trend.”

Comments from Bank of England Governor Bailey will be watched closely on Tuesday. The latest PMI business confidence data on Thursday will also be important for Pound confidence with the latest retail sales data due on Friday.


Consensus forecasts are for a slight net improvement for the business confidence data.

MUFG remains concerned that expectations of fiscal tightening will undermine confidence; “The looming prospect of tax hikes in the autumn could discourage businesses and households from spending in the interim contributing to weak growth continuing in Q3.”

There are strong expectations that the Bank of England (BoE) will cut interest rates next week.

ING commented; “For now, fears about the BoE slipping behind the curve have been allayed by big upward revisions to May’s ominous drop in payroll numbers. But with employment having fallen in seven out of the past eight months, the Bank can’t take anything for granted. An August rate cut is all but guaranteed.”

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TAGS: Pound Euro Forecasts