Pound-to-Euro Forecast: GBP Soft, EUR Awaits ECB Risk

Modified: Thursday, 30 October 2025 10:00 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Forecast: GBP Soft, EUR Awaits ECB Risk

The Pound Euro (GBP/EUR) exchange rate held near recent lows on Wednesday as markets digested the US Federal Reserve’s rate cut and continued to focus on the UK’s fragile fiscal outlook ahead of next month’s autumn budget.

At the time of writing, GBP/EUR was trading around €1.13558, down roughly 0.14% on the day.

The Pound (GBP) struggled to gain traction through Wednesday’s session, weighed down by persistent fiscal concerns and cautious sentiment among investors.

After the Office for Budget Responsibility (OBR) warned earlier in the week of a potential £20bn fiscal shortfall, speculation has intensified that Chancellor Rachel Reeves may unveil a package of tax increases and spending restraints in her November budget to restore market confidence.

The prospect of tighter fiscal policy continues to undermine Sterling, with traders wary that aggressive consolidation could hinder the UK’s already fragile growth outlook.

At the same time, the Bank of England (BoE) is facing growing pressure to cut interest rates sooner, particularly as global central banks shift toward an easing bias following the Fed’s latest move.

While the Fed’s decision lifted overall risk appetite slightly, Sterling failed to capitalise amid renewed budget-related uncertainty and limited UK data.

The Euro (EUR), meanwhile, was steady following Thursday’s European Central Bank (ECB) policy decision, where the bank left rates unchanged but struck a cautiously hawkish tone.

ECB President Christine Lagarde noted that inflation remains “uncomfortably high,” reinforcing market expectations that rates will stay elevated for longer — a stance that lent mild support to the Euro.

GBP/EUR Forecasts: ECB Decision to Set the Tone

Looking ahead, Thursday’s ECB policy decision will likely set the tone for the Pound Euro exchange rate for the remainder of the week.

If the central bank underscores its commitment to keeping rates elevated, the Euro may strengthen further against a still-fragile Pound.

However, lingering budget uncertainty and speculation over UK tax rises could continue to cap Sterling’s upside, keeping GBP/EUR on the defensive in the near term.

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TAGS: Pound Euro Forecasts