Pound-to-Euro Week Ahead Forecast: Analysts Tip 1.11 as BoE Cut Looms

Modified: Sunday, 2 November 2025 19:00 BST - Written by Ben Hughes

STORY LINK Pound-to-Euro Week Ahead Forecast: Analysts Tip 1.11 as BoE Cut Looms

The Pound to Euro exchange rate (GBP/EUR) endured another volatile week as markets braced for what could be one of the most pivotal Bank of England (BoE) decisions in years.

At the time of writing, GBP/EUR was hovering around €1.1400, having briefly touched 30-month lows near €1.1340 earlier in the week.

Mounting fiscal unease and renewed expectations of a BoE rate cut weighed heavily on Sterling sentiment, with investors cautious ahead of next week’s potentially historic policy announcement.

According to Goldman Sachs, “We expect Sterling underperformance to extend from here, and continue to think Sterling downside positions are best expressed versus the Euro or the Scandis.”

The US bank maintains a 12-month forecast of 1.11 for the Pound to Euro exchange rate, reflecting expectations of a prolonged period of Sterling weakness.

Market pricing for the November 6th BoE meeting has shifted notably over the past week, with traders now assigning at least a 30% probability of a rate cut — a significant jump from earlier in October.

IG strategist Chris Beauchamp described the upcoming decision as “genuinely uncertain,” commenting:
“This is one of the more consequential BoE meetings in recent memory. This suggests significant upside for the pound if the BoE disappoints dovish expectations, but also room for a sharp move lower if policymakers signal more aggressive easing ahead.”

While Goldman Sachs is now openly backing a cut, Bank of America (BofA) expects the BoE to hold steady at 4.00%, though it warns this may not provide meaningful support for Sterling.

BofA noted: “However, with budget news-flow intensifying and (sterling) risk premium rising, we think this will be a headwind to a (sterling) recovery.”

Fiscal policy concerns remain a central drag on the Pound, as markets digest reports that the Office for Budget Responsibility (OBR) has downgraded its UK productivity growth estimates, a revision that will likely worsen the government’s deficit outlook.

These revisions could force Chancellor Rachel Reeves into deeper fiscal tightening to meet the government’s fiscal rules — a move that may further constrain growth.

Adding to the uncertainty, political tensions within the government have resurfaced after reports that Reeves failed to pay a property-related fee, briefly fuelling speculation over her position.

According to ING, “In July, when Reeves appeared close to leaving her post, gilt yields spiked. Markets are wary that a change in Chancellor could herald more relaxed fiscal rules and additional borrowing… A surprise resignation, which looks unlikely, would, in our view, cause elevated volatility in gilts and the pound.”

Even so, Goldman Sachs cautioned against becoming excessively bearish on Sterling near term:
“While our upwardly revised expectations for fiscal consolidation (and tax measures) imply a negative mix for the currency, we think the elevated option premium for the event is consistent with those outcomes already being at least partially priced in.”

GBP/EUR Forecasts: All Eyes on the Bank of England

Looking ahead, next week’s BoE policy decision is set to be the defining driver for the Pound Euro exchange rate.

If policymakers deliver a surprise cut, GBP/EUR could break below recent lows and test the €1.13 handle.

However, if the central bank opts for a hold and strikes a balanced tone, Sterling may stage a relief rally — particularly if market pricing for deeper cuts unwinds.

Either way, volatility is expected to surge as traders prepare for what could be a landmark week in UK monetary policy.

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