British Pound to Euro Forecast: GBP/EUR Slides to 1.1350 on Final 2025 BoE Rate Cut Bets

Published: Wednesday, 12 November 2025 08:00 BST - Written by Frank Davies

STORY LINK British Pound to Euro Forecast: GBP/EUR Slides to 1.1350 on Final 2025 BoE Rate Cut Bets

The Pound to Euro (GBP/EUR) exchange rate was unable to sustain a very brief move above 1.1400 in Asia on Tuesday and dipped to near 1.1350 after weaker-than-expected labour-market data triggered another surge in speculation surrounding a December Bank of England (BoE) interest rate cut.

GBP/EUR Forecasts: Weakness Ahead

Foreign exchange strategists at MUFG warn of an GBP/EUR exchange rate target of 1.1240.

The UK unemployment rate increased to a fresh 4-year high of 5.0% in the three months to September from 4.8% previously and compared with consensus forecasts of a smaller increase to 4.9%.

The ONS reported that payrolls declined 32,000 for September, worse than the flash estimate of 10,000 while there was a provisional 32,000 dip for October.

There was, however, a marginal increase in vacancies which broke a 3-year run of lower vacancies.

Headline average earnings increased 4.8% in the year to September compared with expectations of no change at 5.0% while underlying earnings growth met expectations with a slight decline to 4.6% from 4.7%.

Private-sector wages growth slowed to 4.2% from 4.4% previously.

RSM chief economist commented; “Overall, the labour market appears to still be weakening with the unemployment rate ticking up and employment falling on both the LFS and payrolls measures

The weaker than expected data reinforced market expectations that the Bank of England would cut interest rates at the December policy meeting.

According to ING; “These aren’t screamingly dovish figures, but they do endorse to some extent the ongoing dovish repricing of Bank of England rate expectations.

It added; “Remember that part of the BoE’s hawkish pivot in the summer was based on downplaying risks to the labour market whilst refocusing on inflation issues. Now, both inflation and jobs data are starting to point down, and we think the Autumn Budget’s tax hikes will provide the final argument for a cut in December.”

Deutsche Bank chief UK economist Sanjay Raja commented; Today’s data should give the MPC more confidence to cut Bank Rate further by year-end. Labour-market slack continued to widen – even surprising market expectations.

He added; “Pay momentum continued to slow, as expected. And while Budget uncertainty may be hampering hiring plans heading into Q4-25, one thing is clear: today’s data should continue to strengthen the case for a Christmas rate cut.”

MUFG pointed to the importance of Governor Bailey’s position on the committee; “The scale of weakness in today’s labour market report could be sufficient on its own to tip his vote in favour of a rate cut next month unless there is a significant upside inflation surprise in the CPI reports for October and November.”

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TAGS: Pound Euro Forecasts