British Pound to Euro Forecast: Market Braces for BoE as Sterling Sub-1.14

Modified: Monday, 3 November 2025 14:30 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Forecast: Market Braces for BoE as Sterling Sub-1.14

The Pound to Euro (GBP/EUR) exchange rate has stabilised just below 1.1400 after falling to 30-month lows last week, as traders turn their focus to Thursday’s Bank of England policy announcement that could define Sterling’s near-term path.

GBP/EUR Forecasts: Holds Above 30-Month Lows

After sliding to a 30-month low close to 1.1340 last week, the Pound to Euro rate has clawed back losses to trade just below the 1.1400 level.

ING commented; “EUR/GBP could come a little lower this week if the BoE retains some of the hawkishness discovered this summer. But we suspect buying interest returns in the 0.8730/50 area.” (GBP/EUR selling on any rallies to 1.1450)

The Bank of England policy decision this Thursday will be a key event for the Pound with an initial Pound spike inevitable on the actual decision.

Fiscal policy will also be a key underlying element, especially as the budget statement will have an impact on Bank of England policy decisions.

Looking at the immediate decision, markets are pricing in just over a 30% chance of a cut.

According to ING; “we think the BoE will prefer to wait for the contents of the Autumn Budget later this month before making its next move.

It expects a December move, but is not convinced that this would trigger further Pound selling; “With the UK terminal rate already priced at 3.25% for next summer, we find it difficult to justify a much lower pound on the back of an under-priced BoE easing cycle.”

Danske Bank expects a tight vote on Thursday, but sees scope for a narrow majority in favour of a cut with Governor Bailey likely to be the key swing voter on the committee.

According to the bank; “In our base case of a 25bp cut on Thursday, we expect GBP to weaken on announcement and UK yields to move lower.

It added; “More broadly, we stay negative on GBP FX as we see the relative growth outlook between the UK and the euro area as GBP negatives. This is further amplified by divergence in the fiscal policy outlook with UK fiscal policy set to be tightened in the Autumn.”

It continues to back medium-term losses to 1.1240.

Credit Agricole does not expect a rate cut this week, but notes the risk of dovish guidance; “That being said, the BoE’s updated policy statement and BoE Governor Andrew Bailey’s press conference could nevertheless suggest that future fiscal austerity measures could pose downside risks to the bank’s latest outlook. As a result, the GBP could remain vulnerable in the run up to the November budget.”

UBS is more positive on the fiscal outcome; “The Autumn Budget on 26 November could result in a partial pricing out of the GBP’s fiscal risk premium and push EURGBP lower.”

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TAGS: Pound Euro Forecasts