Pound-to-Euro Forecast: Sterling Tipped to Range 1.1500-1.1630

Modified: Sunday, 14 September 2025 22:15 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Forecast: Sterling Tipped to Range 1.1500-1.1630

The Pound to Euro (GBP/EUR) exchange rate slipped back to 1.1550 last week after UK GDP data showed zero growth in July and the ECB signalled its rate-cutting cycle is over.

The soft domestic backdrop and hawkish ECB commentary leave Sterling vulnerable ahead of next week’s UK jobs and inflation releases, with analysts warning GBP/EUR could struggle to hold recent highs above 1.1580.

GBP/EUR Forecasts: Retreats from 2-Week High

After hitting 2-week highs above 1.1580 in Europe on Thursday, the Pound to Euro (GBP/EUR) exchange rate has dipped to near 1.1550.

The Pound drew no support from the latest UK GDP data while the Euro gained support from the latest ECB commentary.

ING noted the importance of next week’s UK jobs and inflation data adding; “our BoE call (November cut) remains more dovish than markets’ and we see upside risks for EUR/GBP. (losses for GBP/EUR)

On a near-term view it added; “But until those figures are released EUR/GBP may prefer the lower end of the 0.86-0.87 range rather than a break higher.”

This would imply GBP/EUR trading in the upper half of the 1.1500 – 1.1630 range.

According to the ONS, UK GDP was unchanged in July, in line with consensus forecasts and following 0.4% growth for June.

The services sector secured marginal 0.1% and the construction sector recorded a 0.2% gain, but industrial production declined 0.9%.

GDP increased 0.2% in the three months to July with a decline in the industrial sector again dragging the overall figure lower.

ONS director of economic statistics Liz McKeown commented; “Growth in the economy as a whole continued to slow over the last three months. While services growth held up, production fell back further.”

According to the ONS the electronics and pharmaceutical sectors have been under pressure.

Yael Selfin, Chief Economist at KPMG UK, commented on the industrial sector: “A reversal in fortune appears unlikely for the sector with global headwinds set to persist.”

Quilter James investment strategist Lindsay James commented; “With the summer now over and the economy supposedly getting out of its slumber, we now face continuing uncertainty in the lead up to the budget in November given the precarious position the Chancellor finds the public finances in.”

XTB research director Kathleen Brooks commented; “If the third quarter is not going to be a disaster for the UK economy, then growth in August and September will need to do the heavy lifting.”

The ECB held interest rates at 2.0% and hinted that further rate cuts were unlikely amid economic resilience, fading disinflation and sticky wages growth.

ING commented; “All in all, the implicit message to markets was that there are no reasons to keep pricing in additional rate cuts as things stand. Indeed, the implied probability of further easing dropped below 50% after Lagarde’s presser, offering strong rate-driven backing to the euro rally.”

It added; “While we wouldn’t fully rule out a resurgence of dovish sentiment – especially as tariffs, a strong euro, and geopolitical or sovereign debt risks may prompt future action – our baseline view remains aligned with market expectations: the ECB is done cutting rates.”

Danske Bank noted; “We keep our call that the ECB will not make any policy rate changes in 2025 or 2026.”

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TAGS: Pound Euro Forecasts