British Pound to Euro Forecast: Sell GBP/EUR Rallies, But Not Yet

Modified: Tuesday, 5 August 2025 14:30 BST - Written by Frank Davies

STORY LINK British Pound to Euro Forecast: Sell GBP/EUR Rallies, But Not Yet

The Pound to Euro exchange rate (GBP/EUR) found support just above 1.1450 on Monday and has strengthened back above the 1.1500 level on Tuesday.

Markets will be watching the Bank of England to see whether GBP/EUR can break resistance near 1.1630 or support around 1.1420.

UBS will be looking to sell GBP/EUR rallies, but not yet; “We remain bearish GBP, targeting EURGBP 0.88 for year-end (1.1365 for GBP/EUR), but do not think now is the right time to position for this as we are not expecting a change in language from the BoE on 7 Aug.

Stronger than expected Chinese services-sector data was supportive and the FTSE 100 index was pushing back to near record highs.

There was also an upward revision to the UK services-sector data which slightly eased market fears over the outlook.

The final reading for the UK PMI services-sector index was revised to 51.8 for July from the flash reading of 51.2, although still below the June reading of 52.8.

New orders contracted at the fastest rate since November 2022 and employment also continued to decline, but overall business confidence improved to the second-highest reading since October 2024.


Inflation evidence was mixed with cost pressures still above the long-term average despite some monthly moderation while charges increased at a faster pace.

Tim Moore, Economics Director at S&P Global Market Intelligence commented; "Despite headwinds from strong cost pressures and lacklustre domestic economic conditions, service providers remain upbeat overall regarding the year ahead business outlook. Optimism improved since June, helped by hopes of a boost to business and consumer spending from interest rate cuts in the second half of 2025."

There are still very strong expectations that the Bank of England will cut interest rates by 25 basis points to 4.00% this week.

The Euro-Zone PMI services sector was revised slightly lower to 51.0 for July from the flash reading of 51.2, but remained above the June reading of 50.5.

Cost pressures declined to a 9-month low while output charges increased at a slightly slower rate.

According to Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank; “This could turn out to be a good summer for service providers.”

He added; “Inflation is easing in the eurozone’s services sector, increasing the likelihood of one further interest rate cut by the European Central Bank in the second half of the year.”


According to ING; “As a house, ING still pencils in an ECB rate cut in September - which is clearly a bold call.”

Danske Bank noted; “Monetary policy is in a ‘good place’, and recent events have made it less likely ECB will conclude otherwise.”

The bank had backed a September cut, but added; “We have revised our call ECB call following the recent string of events, and we now expect the ECB to keep its policy rates unchanged throughout 2025-26.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Pound Euro Forecasts