British Pound to Euro Forecast: "Strong" Dip Buying at 1.15

Modified: Monday, 18 August 2025 16:15 BST - Written by Tim Boyer

STORY LINK British Pound to Euro Forecast: "Strong" Dip Buying at 1.15

The Pound to Euro exchange rate (GBP/EUR) edged up to 1.1580 on Monday after starting the day around 1.1570.

Pound Sterling gained support from reduced expectations of an imminent Bank of England rate cut, while geopolitical developments and upcoming UK inflation data remain the key drivers.

Pound-to-Euro Exchange Rate Outlook BoE Geopolitics and Inflation

ING continues to expect strong Pound resistance close to 1.1630, but firmer support on any dips towards 1.1500.

The UK currency has drawn net backing from speculation that the Bank of England will hold off from sanctioning another early rate cut.

Ukraine Talks in Washington to Dominate

Geopolitics are likely to overshadow markets over the next 24 hours as crucial Ukraine talks take place in Washington. President Zelensky will meet President Trump on Monday, joined by several European leaders including UK Prime Minister Starmer.


President Trump has softened his previous demand for a ceasefire and is now focused on securing a peace deal. He has ruled out a return of Crimea to Ukraine and excluded NATO membership, with talks likely to centre on territorial concessions and security guarantees.

MUFG commented; “A further reduction in geopolitical risk should a ceasefire be agreed would favour lower volatility.”

Any breakdown in discussions, or renewed US threats to withdraw support, would tend to undermine the Euro.

The Euro will also be influenced by developments in energy markets. European natural gas prices have slipped to 15-month lows and any further decline would support the single currency more than Sterling.

ING noted; “European currencies seem to be holding onto recent gains. Whatever the news from Washington today, what is welcome is the decline in oil and gas prices.”

Firmer global risk appetite, however, would lend additional support to the Pound.

Market Positioning: Sterling Shorts Near 40,000


Latest COT data from the CFTC showed a further increase in non-commercial Sterling short positions to nearly 40,000 contracts from 33,000 previously – the largest since November 2022.

This sizeable short interest may limit the scope for fresh selling and raise the risk of short covering if incoming data point to UK economic resilience.

UK economic releases will be crucial in the days ahead. Wednesday’s CPI report is expected to show headline inflation rising slightly to 3.7% from 3.6%, with the core rate holding steady at 3.7%.

MUFG commented, “The release of the UK CPI report in the week ahead will be scrutinised even more closely now for upside risks to the inflation outlook, which could deter the BoE from cutting rates again in November.”

Stronger-than-expected numbers, especially in the services sector, would bolster hawkish voices within the Bank of England. Conversely, weaker data would revive bets on a November cut, weighing on Sterling.

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TAGS: Pound Euro Forecasts