Pound to Euro Forecast: 1.15 Next for Sterling Ahead of BoE Risk

Modified: Monday, 4 August 2025 10:53 BST - Written by Tim Boyer

STORY LINK Pound to Euro Forecast: 1.15 Next for Sterling Ahead of BoE Risk

After a plunge on Friday, the Pound to Euro exchange rate (GBP/EUR) managed to find support just above the 1.1450 level and is trading around 1.1470.

Equities have attempted to stabilise following sharp losses following Friday’s shock US jobs data. Confidence, however, remains fragile and the data has injected a huge element of uncertainty surrounding the impact of tariffs which will drive further volatility.

This week’s Bank of England (BoE) decision and guidance will also be a key ingredient driving big Pound moves in global markets.

MUFG commented; “The continued gradual easing by the MPC but weak growth and uncertainty over the UK’s fiscal position will likely see the pound underperform against many other G10 currencies.”

It added; “EUR/GBP is set to drift higher with the BoE having more easing to do over the forecast period.” It expects a gradual drift lower to 1.1365 by the second quarter of 2026.

Confidence in the US economy has dipped and, importantly, market confidence that the impact of tariffs has been absorbed by the US and global economy has been dented by substantial downward revisions to the jobs data.

The Pound will be vulnerable in global markets if risk appetite deteriorates further while the Euro is likely to gain defensive support.


ING commented; “We’ll also keep a close look on the FX option market.”

The latest CoT data, released by the CFTC, reported further Pound selling in the latest week with speculators turning negative on the currency.

The data recorded a net short Sterling position of 12,000 contracts compared with a small positive position the previous week and the first short position for over five months.

Although the data illustrates the dip in Pound confidence among traders, the liquidation of long positions will lessen the risk of further selling.

There are very strong expectations that the BoE will cut interest rates by 25 basis points to 4.00% at this week’s policy meeting. There are, however, also expectations of a split vote with the potential for a three-way split as some members will back larger cuts while some could vote against any cut.

Uncertainty will remain a key element as markets wait for further UK data releases.

There has, however, been a sharp shift in market expectations surrounding Federal Reserve policy with traders now indicating that the most likely outcome is for three cuts before the end of 2025.


Markets are, therefore, expecting that UK rates will be the highest in the G7 area by the end of 2025 which could provide an element of Pound Sterling support.

As far as the Euro-Zone is concerned, a steady ECB policy is likely in the short term with markets expecting a further small net improvement in investor confidence in the latest Sentix data due on Monday.

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TAGS: Pound Euro Forecasts