British Pound to Euro Forecast: Political Deadlock in France Adds to GBP Weakness Risks

Modified: Tuesday, 14 October 2025 08:45 BST - Written by Tim Boyer

STORY LINK British Pound to Euro Forecast: Political Deadlock in France Adds to GBP Weakness Risks

Pound Sterling Held Below 1.15 as UK and French fiscal pressures dominate

The Pound to Euro exchange rate (GBP/EUR) dipped sharply to 1.1460 on Friday before a tentative recovery to near 1.1500 on Monday.

French political developments and global trade rhetoric will be important elements with the prospect of UK November tax hikes also a key Pound factor.

The degree of success for both governments in easing market concerns over fiscal policy will be crucial.

MUFG maintains a GBP/EUR target of 1.1240 and commented; “we still expect the GBP to weaken ahead of the Autumn Statement.”

Newly re-appointed French Prime Minister Lecornu announced his cabinet over the weekend and made only very limited changes to the previous administration.

The government needs to present the 2026 budget early this week.

Danske Bank noted; “His survival depends on at least the tacit support from the Socialists and Republicans. To get the socialist support he will likely present a watered-down version of the previous budget proposals with less strict spending cuts and a possible change to the pension reform.”

ING commented; “Doing the same thing over and over again and expecting different results is often described as Albert Einstein's definition of insanity. Some might attribute this to the current cycle of French politics, where President Macron has re-appointed Sébastien Lecornu as prime minister and has asked him to present a revised budget to parliament.”

It added; “That seems likely to fail and result in a no-confidence vote later this week, which will leave France without a government.”

According to Danske Bank; “If Lecornu is ousted in a vote of no confidence Macron must appoint a new PM or call for a snap election, which still is a significant risk.”

ING considers that this is a negative factor for the Euro, especially on the EUR/CHF cross.

The latest UK labour-market data is due on Tuesday with the unemployment rate expected to hold at 4.7% with the headline annual increase in average earnings also remaining at 4.7%.

Data on private-sector wages and the change in payrolls will be watched closely.

MUFG commented; “Recently the BoE have indicated more concern over persistent inflation risks and signalled that they are likely to slow the quarterly pace of rate cuts. A much weaker labour market is required to change their view on slowing rate cuts.”

Fiscal policy will also remain a key focus in the short term with strong expectations that Chancellor Reeves will raise taxes again in the November budget.

The Institute for Fiscal Studies (IFS) has called for Reeves to avoid “directionless tinkering and half-baked fixes" and added that the government should focus on tax reform, especially on property taxes to improve the system and raise revenue at the same time.

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