Pound to Euro Forecast: GBP Falls Below 1.15 EUR as Banking Fears Rock Markets

Modified: Sunday, 19 October 2025 23:15 BST - Written by Frank Davies

STORY LINK Pound to Euro Forecast: GBP Falls Below 1.15 EUR as Banking Fears Rock Markets

The Pound to Euro exchange rate (GBP/EUR) retreated below 1.15 as renewed global banking fears and a flight to safety boosted defensive assets.

Foreign currency experts warn that the Pound Sterling remains vulnerable if risk appetite continues to erode.

Pound Dips as Fear Stalks Global Financial Sector, GBP/EUR Back Below 1.15

The Pound to Euro (GBP/EUR) exchange rate was unable to regain the 1.1550 level on Thursday and gradually lost ground with further losses to near 1.1470 on Friday.

Risk appetite dipped sharply on Friday with significant losses for equities following a warning by two US regional banks over loan losses.

The FTSE 100 index posted a 1.6% decline amid a wider sell-off while gold surged to another record high which illustrated the on-going demand for defensive assets.

According to AJ Bell investment director Russ Mould; “US banking stocks were notably weak yesterday as investors worried about exposure to bad loans. That spread to Europe on Friday, with Barclays, Standard Chartered, NatWest and HSBC all dragging the FTSE 100 down.”


JP Morgan CEO Jamie Dimon sparked angst with comments that; "When you see one cockroach, there are probably more, and so everyone should be forewarned."

IG chief market analyst Chris Beauchamp noted the pressures; “It was an ugly session on Wall Street yesterday, as small gains gave way to an accelerating move to the downside on fears about the US regional bank system.

There were echoes of the Silicon Valley Bank collapse in 2023.

Beauchamp added; “This feels like a rerun of 2023, but it comes as the market is struggling to digest the latest US-China trade spat and spells trouble in the short-term at least. Sentiment remains skittish, and the instinct will be to sell first and ask questions later.”

The Euro also gained an element of defensive support while the Pound is also vulnerable when risk appetite slides.

Sterling can, in theory gain support from high yields, especially if the dip in in risk appetite is only temporary.

Markets at this stage are still not expecting further Bank of England rate cuts this year.

Raj Badiani, economics director at S&P Global Market Intelligence commented; "Despite persistent growth concerns, still-elevated earnings growth and the prospect of headline inflation rising to 4% in September are likely to rule out a further interest rate cut this year."

There will still be speculation that the interest rate narrative could change quickly, especially with strong expectations of tax increases in the November budget.

As far as the Euro-Zone is concerned, French Prime Minister Lecornu survived two confidence votes in the National Assembly on Thursday and the debate now will focus on the 2026 budget.

MUFG commented; “It provides more breathing room for Prime Minister Lecornu to put together a budget for next year although it remains far from clear that his budget will pass smoothly through parliament. Political uncertainty could flare up again later this year if the proposed budget for next year fails to pass through parliament.”

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TAGS: Currency Predictions Pound Euro Forecasts