British Pound to Euro Forecast: UK Economic Outlook Boosts Sterling

Published: Tuesday, 12 August 2025 09:00 BST - Written by Ben Hughes

STORY LINK British Pound to Euro Forecast: UK Economic Outlook Boosts Sterling

Pound Sterling Relief After Latest UK Jobs Data, GBP/EUR Hits Fresh 10-Day Best

The Pound to Euro (GBP/EUR) exchange rate secured net gains after the latest UK labour-market data with evidence of resilience underpinning confidence in the economy and reinforcing expectations that the Bank of England would remain cautious in cutting interest rates.

Pound Sterling hit fresh 10-day highs against the Euro close to 1.1580 amid some further evidence of short covering.

ING commented; “Sterling is trading on the strong side this morning as jobs figures were seen as slightly upbeat, and EUR/GBP may well test 0.860 in the coming days. (1.1630 for GBP/EUR).

The Pound was unable to break above this level in late July.

According to the latest labour-market survey, the unemployment rate held at 4.7% in the three months to June which was in line with consensus forecasts and the highest rate for close to four year.

The June decline in payrolls was revised to 26,000 from the flash reading of 41,000 while the provisional July decline was held to 8,000.


Vacancies declined for the 37th successive month.

According to the ONS; “some firms may not be recruiting new workers or replacing workers who have left”.

The headline annual increase in average earnings slowed to 4.6% from 5.0% previously, slightly below consensus forecasts of 4.7% while underlying earnings growth held at 5.0%.

ONS director of economic statistics Liz McKeown added; “taken together, these latest figures point to a continued cooling of the labour market. The number of employees on payroll has now fallen in ten of the last twelve months, with these falls concentrated in hospitality and retail.”

ING had previously noted last week’s Bank of England rhetoric surrounding the labour market; “There were many notable things about August’s Bank of England decision, but one of them was just how unfazed policymakers appeared to be about the jobs market. That was despite a sizable cooling in hiring conditions over recent months.”

It added; “However, the Bank’s view appears to be borne out by the most recent set of job numbers. Payroll employment fell only fractionally, by 8,000 workers between June and July. Though that marks the eighth monthly fall in the past nine months, it is the smallest of those declines. And given that these figures have a tendency to be revised up, it may transpire that employment actually grew slightly through July, once we get the final numbers.”

According to Capital Economics UK economist Ashley Webb; “the modest fall in payroll data suggests that the fallout in the jobs market from the rise in business taxes and the minimum wage is calming down.”


Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, was more downbeat; “These figures signal growing turmoil in the UK labour market, with April’s leap in employment costs and a flagging economy pushing more businesses to actively cut headcount and cap pay awards.”

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TAGS: Pound Euro Forecasts