Budget Jitters Keep Pound to Euro Rangebound

Modified: Tuesday, 25 November 2025 22:05 BST - Written by David Woodsmith

STORY LINK Budget Jitters Keep Pound to Euro Rangebound

The Pound to Euro exchange rate (GBP/EUR) held within a tight band on Tuesday, with Sterling struggling to break higher as traders kept their focus firmly on the upcoming UK budget.

At the time of writing, GBP/EUR was hovering around €1.1374, virtually unchanged on the session.

The Pound (GBP) found modest support on Tuesday morning, nudging higher against a handful of major currencies as traders waited for the autumn budget to land.

The lift came following reports that Chancellor Rachel Reeves plans to avoid imposing a fresh tax squeeze on the banking sector. Lenders had warned that any new levy would curb lending and risk undermining the wider economy - an argument that appears to have persuaded the Treasury.

Even so, Sterling’s progress remained limited. Persistent nerves over what the budget might contain kept investors cautious, tempering GBP appetite and maintaining a tense backdrop for the currency.

The Euro (EUR) traded unevenly on Tuesday, pulled between improving geopolitical sentiment and stark economic data from Germany.

Positive signals around a potential Russia–Ukraine peace framework continued to lend the single currency some support, with investors cautiously encouraged by signs of diplomatic movement.

However, that optimism was overshadowed by confirmation that German GDP stagnated in the third quarter after shrinking 0.2% in the previous period. The lack of momentum in Europe’s largest economy kept EUR on the back foot and injected fresh uncertainty into the economic outlook.

GBP/EUR Forecast: Budget to Stoke Sterling Volatility

Looking ahead, the UK's autumn budget looms large for the Pound, with Wednesday’s announcement primed to ignite sharp moves in GBP trade.

The fog of uncertainty as the budget approaches has markets on edge, and the reaction may be amplified as traders assess how the measures land in terms of growth prospects, borrowing plans, political stability, and implications for interest rates.

If Chancellor Rachel Reeves delivers a steadier-than-feared package, Sterling may see an initial lift as investors welcome a more measured fiscal stance.

However, the risk remains that tax rises and spending reductions, coupled with the potential for political turbulence, bond market unease, or weaker growth projections, could worsen concerns around the UK outlook. A tighter fiscal path may also revive expectations for deeper Bank of England (BoE) rate cuts, potentially dragging GBP toward fresh multi-month lows.

With little Eurozone data scheduled, EUR traders will look to comments from European Central Bank (ECB) President Christine Lagarde. Any reinforcement of her recent caution over the bloc’s sluggish growth could leave the Euro under pressure.

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TAGS: Pound Euro Forecasts