British Pound to Euro Forecast: GBP Rises as France Faces Political Deadline

Modified: Thursday, 9 October 2025 08:45 BST - Written by Tim Boyer

STORY LINK British Pound to Euro Forecast: GBP Rises as France Faces Political Deadline

The Pound to Euro exchange rate pushed higher to 1.1540 despite conflicting market signals - record FTSE highs pointing to optimism, but gold’s surge above $4,000 signalling deep investor unease.

GBP/EUR Forecasts: Sterling Hits 3-Week Highs

The Euro has suffered a further setback in early Europe on Wednesday with the Pound to Euro (GBP/EUR) exchange rate strengthening to 3-week highs around 1.1540.

Markets are continuing to monitor underlying market conditions very closely given current moves.

UK equities were able to make further headway on Wednesday with the FTSE 100 index at a fresh record high which suggests firm risk conditions, but gold has surged to a fresh record high close to $4,050 per ounce which suggests underlying unease over financial and geo-political conditions.

There is an important risk that currency volatility will explode.

There have been no significant UK data releases, but there has been another embarrassing mistake from the Office for National Statistics (ONS) who reported that the government borrowing requirement for the currency year had been overstated by £2.0bn.

There were further concerns surrounding the near-term German economic outlook.

Industrial production slumped 4.3% in August after a 1.3% increase the previous month and compared with consensus forecasts of a 1.0% decline.

ING noted the potential for support from the fiscal boost, but added; “All in all, it’s not only the general mood in Germany that turned sour over the summer. Available monthly data so far suggests that the risk of yet another quarter of contraction and thus an outright technical recession is very real.”

The French political situation will continue to be monitored closely in the short term. Prime Minister Lecornu, who tendered his resignation on Monday, is due to outline a last-ditched attempt to reach a consensus by the end of Wednesday.

According to Danske Bank; “Betting markets assign roughly a 60% probability of snap elections by month-end, though such an outcome may do little to resolve the underlying gridlock.”

The latest comments from Lecornu were slightly more positive.

According to Lecornu the 2026 budget deficit target should be below 5% of GDP and that there will be a budget before the end of this year.

He stated that the possibility of parliamentary dissolution was becoming more remote.

Any deal would be likely to provide an element of Euro relief.

ING expects the reaction would be muted; “The formation of a new government today may not yield huge benefits to the euro, considering the fragility of any political agreement at this stage.”

Rabobank commented on market chatter; “a possible way out being floated is France abandoning its planned pension reforms to placate socialists in parliament. Yet would that risk swapping a political crisis for a financial one?”

Danske Bank noted; “FX markets will continue to track the OAT-Bund spread as a key gauge of French risk. A sustained widening from here would likely reignite fiscal concerns.”

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TAGS: Pound Euro Forecasts