Pound-to-Euro Forecast: Analysts See GBP Below 1.15 Ahead of November Budget

Modified: Friday, 5 September 2025 08:30 BST - Written by Frank Davies

STORY LINK Pound-to-Euro Forecast: Analysts See GBP Below 1.15 Ahead of November Budget

The Pound to Euro (GBP/EUR) found support below 1.1500 before edging to 1.1535, but the outlook remains fragile ahead of the November budget.

According to analysts, GBP/EUR is more likely to trade below 1.15 rather than above 1.1630 into the UK budget, with fiscal fears and tax speculation continuing to weigh on Sterling despite short-term yield support from the Bank of England.

GBP/EUR Forecasts - Rebound from 3-Week Lows Continues

The Pound to Euro (GBP/EUR) exchange rate again found support below 1.1500 on Wednesday and rallied to 1.1535 on Thursday.

Immediate fears surrounding the bond market have eased while Bank of England Governor Bailey’s warning over interest rates also underpinned short-term rates which generated a more favourable yield curve for the currency amid higher short-term rates.

The foundations, however, remain fragile given on-going fiscal fears.

The Pound is still struggling to shake-off fiscal concerns with the risk that budget and tax speculation will continue to dominate.

According to ING, GBP/EUR is more likely to trade below 1.15 rather than above 1.1630 into the November budget.

Chancellor Reeves announced that the budget will be on November 26th and the risk for the currency is that speculation over tax hikes will dominate coverage throughout the next few weeks.

BMO Director & Head, EMEA Rates Strategy Laurence Mutkin considers that pessimism may well be overdone; "Expectations for the Budget are so gloomy, there is scope for upside surprises."

Bank of England Governor Bailey was notably cautious over the outlook for UK interest rates, but he did inject further uncertainty surrounding interest rate cuts.

According to Bailey; "There is now considerably more doubt about exactly when and how quickly we can make those further steps.

He did add that the path remained "downwards gradually over time".

Bailey also noted that market expectations have shifted; "Now, I think actually, judging by what's happened, certainly to market pricing since then, I think that message has been understood."

Markets are now pricing in just under a 20% chance that rates will be cut in November.

ING commented; “We still believe the BoE will cut before year-end, and while we thought yesterday’s GBP drop was overdone, the coming months will likely see multiple headlines and speculation about the content of the Budget, with elevated risks of adverse spillover into gilts and sterling.”

It still sees scope for further rate cuts; “As markets may not feel comfortable completely wiping out December cut bets due to the Budget impact itself, the pound may not count on much more support from front-end rates.”

Bailey played down the importance of higher long-term bond yields. He noted that this was a function of global pressures and noted that its funding role was limited.

According to Bailey; "It's a number that gets quoted a lot. It is quite a high number but it is not what is being used for funding at all at the moment actually."

Danske Bank is relatively optimistic over the Euro-Zone outlook which will limit GBP/EUR support; “Growth has exceeded expectations, and the labour market remains resilient. The EU-US trade deal has reduced a significant downside risk to the economic outlook.”

Danske added; “The ECB has reached its terminal rate of 2%, and we expect no changes within the forecast horizon.”

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TAGS: Pound Euro Forecasts