Pound-to-Euro Nears 1.13 on Fiscal Concerns

Modified: Wednesday, 29 October 2025 08:55 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Nears 1.13 on Fiscal Concerns

The Pound to Euro exchange rate (GBP/EUR) fell sharply on Tuesday, extending its recent slide as renewed fiscal concerns and weak sentiment toward UK assets drove fresh selling pressure.



The Euro (EUR) managed to find slight traction despite disappointing German data. The latest GfK consumer confidence index dropped to -24.1 for November from -22.5 previously, missing forecasts for an improvement to -22.0.

Even with the weaker print, the Euro benefited from a mildly risk-off market tone, as investors opted for the relative stability of the single currency over risk-sensitive currencies like the Pound.

The Pound (GBP), meanwhile, remained under sustained pressure as attention turned to Chancellor Rachel Reeves’ upcoming Autumn Budget.

The Office for Budget Responsibility (OBR) warned that the UK faces a £20bn fiscal shortfall, citing sluggish productivity growth and limited momentum in economic output.

The report reignited speculation that Reeves may be forced to raise taxes to stabilise the public finances — a move markets fear could squeeze household spending and slow the recovery further.

Sterling drifted lower through the session amid these fiscal jitters and the lack of supportive domestic data, leaving traders reluctant to rebuild long positions ahead of next week’s key central bank meetings.

GBP/EUR Forecast: Market Mood to Guide Mid-Week Trade

Looking ahead, the Pound-Euro exchange rate is expected to remain largely at the mercy of risk sentiment, with few major economic releases due from either side.

If global markets remain cautious, the Euro could extend its recent gains against a fragile Pound, benefiting from its perceived safe-haven characteristics.

However, any rebound in risk appetite — or signs of fiscal restraint being paired with supportive growth measures — could help Sterling stabilise, potentially lifting GBP/EUR back toward the 1.1450 area in the short term.

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TAGS: Pound Euro Forecasts