Pound-to-Euro Forecast: GDP "Make or Break" for Sterling

Modified: Wednesday, 13 August 2025 11:00 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Forecast: GDP "Make or Break" for Sterling

Pound Sterling Retreats from 10-Day Best Against the Euro Ahead of UK GDP Data

The Pound to Euro exchange rate (GBP/EUR) briefly hit 1.16 after Tuesday’s labour-market data, but failed to hold the gains and retreated to near 1.1550 on Wednesday.

A fresh round of Euro buying against the dollar hampered the Pound while Sterling drifted lower in global markets.

The next key test for the Pound will be Thursday’s UK GDP report with the data crucial in determining near-term Pound sentiment.

As far as the monthly data is concerned, consensus forecasts are that there will be 0.2% growth for June following a 0.1% contraction for May.

Given that there was also a decline for April, there will inevitably be a weak figure for the second quarter.

Expectations are for 0.1% growth for the second quarter after 0.7% growth for the first quarter. There will be revisions to previous data which could lead to more comfortable growth for the second quarter or a dip into contraction.


Credit Agricole still sees some scope for Pound support on a shift in interest rate expectations; “UK wage growth remains among the strongest in G10, could corroborate the view that a modest output gap may not be enough to bring inflation to the BoE’s 2% target anytime soon. In turn, this could encourage UK rates markets to continue to reassess their modestly dovish BoE outlook, in a boost to the GBP.

Stronger data would offer some Pound support while a weak release would trigger fresh unease over the fundamentals and also bring fiscal concerns back into focus.

The UK 10-year yield remains above 4.60% which could underpin the Pound, although there will also be fresh concerns over the burden of debt interest payments.

According to HSBC; “If the BoE slows the pace of rate cuts, it is likely to support GBP in the near term but could hold back the economy at time when the Chancellor is expected to impose tax hikes in the Autumn.

The latest German ZEW investor confidence index dipped to 34.7 for August from 52.7 the previous month and below consensus forecasts of 39.5 and there was also a decline in the current conditions component.

According to the ZEW; “Financial market experts are disappointed from the announced EU–US trade deal.”

ING noted market doubts that the ECB would cut rates again. It added; “We continue to see this pricing as too conservative and a potential vulnerability for the euro moving on. But that is unlikely to play out over the next couple of weeks.”


The Euro impact was limited with renewed dollar concerns triggering fresh demand for the single currency. The new chief of the US Bureau of Labor Statistics, EJ Antoni suggested that the monthly payrolls report could be suspended which unsettled the US currency.

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TAGS: Pound Euro Forecasts