British Pound to Euro Forecast: French Relief Supports EUR, Weighs on GBP

Modified: Friday, 10 October 2025 09:38 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Forecast: French Relief Supports EUR, Weighs on GBP

The Pound to Euro exchange rate (GBP/EUR) hit three-week highs just above 1.1550 on Wednesday but failed to sustain momentum, sliding back toward 1.1500 on Thursday as Euro sentiment improved and UK fiscal nerves resurfaced.

Foreign exchange forecasters warn that a break below 1.15 could open the door to deeper losses ahead of the November budget.

GBP/EUR Forecasts: All Eyes on France

The latest French political developments offered modest Euro support while the Pound turned defensive across global markets.
UK fiscal concerns remain close to the surface and are expected to dominate trading in the lead-up to the late-November budget, with Parliament due to return next week.

The FTSE 100 index also edged lower, dragged by weakness in bank shares.

Outgoing French Prime Minister Lecornu said on Wednesday that appetite for fresh elections had faded and that all parties recognised the need to pass the budget. He added that President Macron would appoint a new Prime Minister by week’s end.

Betting markets, which earlier priced a 70% chance of snap elections, have now cut that probability to below 40%.
Danske Bank noted; “Outgoing PM Lecornu said progress had been made on budget discussions with the different parliamentary groups.”

French bonds rallied in response, narrowing the spread over German Bunds.
ING commented; “After spiking to the high-80s on Monday, the French:German OAT:Bund spread is drifting back to the low-80s. This news may be enough to buy the euro a reprieve until Friday evening at least.”

Still, political uncertainty lingers.

MUFG warned; “The incoming prime minister will face a challenging task of navigating a deeply fragmented parliament and forming a functional cabinet. While Macron has avoided calling a snap election for now, the political gridlock likely remains.”

Danske Bank added; “Opposition leaders, however, remain defiant, calling for elections or Macron's resignation.”

In the UK, SocGen expects further volatility in gilts this month, with upcoming labour-market and GDP data key for sentiment.
According to the bank; “The balance of risks remains tilted toward Sterling weakness unless the November budget delivers credible fiscal and growth measures to reassure markets.”

Meanwhile, the Institute of Chartered Accountants in England and Wales (ICAEW) reported that UK business confidence fell to a three-year low as tax fears bite.
The index dropped to –7.3 for the third quarter from –4.2 previously — its fifth straight decline.

The ICAEW said; “This drop in confidence was likely driven by record high tax concerns squeezing profits growth, recruitment and investment activity.”

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