British Pound to Euro Forecast: GBP/EUR Firm Despite Bank's 1.15 Year-End Target

Modified: Thursday, 11 September 2025 08:45 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Forecast: GBP/EUR Firm Despite Bank's 1.15 Year-End Target

The Pound Sterling edged higher to around 1.1565 against the Euro on Wednesday, supported by firm global risk appetite and Sterling’s yield advantage.

ING still targets 1.15 for the Pound to Euro exchange rate (GBP/EUR) by year-end as the Sterling drifts lower, but near-term downside has been cushioned by Euro uncertainty, with France adjusting to a new prime minister and markets awaiting Fitch’s sovereign review.

Both the Bank of England and ECB are expected to hold rates steady next week, with analysts highlighting that high UK yields should continue to offer Sterling some protection.

GBP/EUR Forecasts: Advances to 1-Week Highs

The Pound to Euro (GBP/EUR) exchange rate has continued to edge higher in global markets and is trading around 1.1565 in European trading on Wednesday.

ING has a year-end target of 1.15 as the Pound drifts lower.

Overall risk appetite has held firm despite multiple geo-political concerns which has supported the Pound while Euro support has been dampened by the reports that Russian drones violated Polish airspace.

These geo-political concerns have tended to overshadow French political developments for now.

Following the resignation of Prime Minister Bayrou, President Macron named close ally Lecornu as the new French prime minister.

Danske Bank commented; “A tough job awaits the new premier, gathering support for the 2026 budget, which includes significant spending cuts in its current draft. The impending process may take some immediate pressure of French government bonds as markets await the outcome of the negotiations.

According to ING; “We cannot rule out a further sell-off in French debt as France looks for a new government, but we do not see this as a euro-wide crisis.”

Berenberg expects France will muddle through at this stage; “A genuine financial crisis with a self-reinforcing doom loop remains quite unlikely for the time being. With its almost balanced current account, France is no obvious candidate for a financial crisis.”

It did add; “Of course, we cannot rule it out completely. If the French Socialists, who hold the balance of power in a deeply divided parliament, continue to reject common sense and insist on unfinanceable demands, the risk could rise.”

Danske noted the forthcoming ratings update; “With France up for review on Friday by Fitch, the risk of a downgrade to A+ from AA- may have decreased with the possibility of Fitch awaiting the new budget proposal.”

Monetary policy will also be a key market element.

As far as the September policy decisions are concerned, markets are pricing in over a 95% chance that the Bank of England (BoE) will maintain rates at 4.00% next week.

There are also strong expectations that the ECB will hold the deposit rate at 2.00% at Thursday’s policy meeting.

Investment banks remain cautious over the potential for medium-term BoE rate cuts. HSBC has dropped its call for rate cuts over the remainder of 2025 and now expects no cuts until April 2026.

Deutsche Bank also considers that a December cut is now more likely than a move in November.

Overall yields should provide an element of Pound protection provided there are no serious bond-market stresses.

ING commented; “Sterling's high-yield status makes it an expensive sell, and unless there is some imminent bad news expected, sterling can hold its own at these levels. Next week's Bank of England rate meeting should, in theory, keep sterling supported unless upcoming jobs and CPI releases very much surprise on the downside.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts