Pound-to-Euro Forecast: Break Out After UK GDP Surprise

Modified: Thursday, 14 August 2025 15:44 BST - Written by Ben Hughes

STORY LINK Pound-to-Euro Forecast: Break Out After UK GDP Surprise

1. Live rates update:


2. GBP/EUR 1.16208 (+0.19%)


GBP/USD 1.35501 (-0.26%)

Pound Sterling (GBP) made net gains against the Euro (EUR) and US Dollar (USD) on Wednesday and secured a further net advance in global markets following the latest UK GDP data, although the single currency remained firm in these markets.

The Pound to Euro exchange rate (GBP/EUR) strengthened to around 1.1620, close to the key resistance area around 1.1630, which was tested on several occasions during July.

A sustained break above this level would potentially trigger further gains for the pair.

Markets will also continue to monitor geo-political developments ahead of the Trump-Putin meeting on Friday.

On a monthly basis, GDP increased 0.4% for June after a 0.1% decline for May and compared with consensus forecasts of 0.2% growth.


The services sector showed 0.3% growth for the month.

Industrial production increased 0.7% after a revised 1.2% contraction previously, while construction output increased 0.3%.

The April figure was revised to show a 0.1% contraction compared with the previous estimate of -0.3%.

ONS director of economic statistics Liz McKeown commented; “Growth slowed in the second quarter after a strong start to the year. The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes, but then recovered strongly in June.”

For the second quarter of 2025, GDP increased 0.3% compared with expectations of 0.1% growth and following 0.7% growth for the first quarter of the year.

There was 0.4% growth in services, but industrial output declined slightly.

GDP increased 1.2% compared with the same quarter in 2024.


There were some less positive aspects as growth was driven to an important extent by increased government spending while investment increased only 0.1% for the quarter with a 4.0% annual decline.

ONS’ McKeown added “Across the second quarter as a whole growth was led by services, with computer programming, health and vehicle leasing growing.

ING was modestly positive on the release; “That shows decent underlying activity growth despite the tariff-induced downward distortion. It’s positive news for the gilt market ahead of the Autumn fiscal event.”

The data will tend to deter any further near-term rate cuts by the Bank of England.

According to ICAEW economics director Suren Thiru; “While these stronger than expected figures may not ease concerns among rate-setters over the health of the UK economy, a September interest rate cut remains implausible given mounting concerns over rising inflation.”

The Euro is still performing well in global markets, limiting the scope for GBP/EUR gains.

SocGen, for example, no longer expects a rate cut in September; “In light of recent newsflow and data, with agreement of a US trade deal and euro area 2Q GDP data not delivering any major downside surprises and July HICP inflation surprising slightly to the upside, we see reduced pressure on the ECB to provide more support to the economy at the September meeting.”

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TAGS: Pound Euro Forecasts