Pound to Euro Firms as Markets Assess Budget Impact

Modified: Wednesday, 26 November 2025 22:35 BST - Written by Tim Boyer

STORY LINK Pound to Euro Firms as Markets Assess Budget Impact

The Pound to Euro exchange rate (GBP/EUR) edged higher on Wednesday as markets responded cautiously but positively to the unveiling of the UK’s autumn budget.

At the time of writing, GBP/EUR was sitting around €1.1409, up roughly 0.3% across the session.

The Pound (GBP) was subdued as Wednesday’s session began, with traders keeping to the sidelines ahead of Chancellor Rachel Reeves’s budget announcement.

Pound Sterling briefly dipped after the Office for Budget Responsibility (OBR) mistakenly released its economic forecast two hours early, injecting a dose of confusion into financial markets.

However, the currency quickly regained momentum once the full budget was delivered. Bond markets welcomed Reeves’s move to carve out £22bn of fiscal headroom - a larger-than-expected buffer that signalled a more cautious and credible fiscal stance.

Stronger growth projections for 2025 provided an additional boost. With a clearer policy outlook and weeks of speculation finally resolved, investors were able to breathe easier, giving the Pound room to firm.

The Euro (EUR) traded without clear direction on Wednesday as fading optimism over potential progress in the Russia–Ukraine conflict weighed on sentiment.

Hints earlier in the week that a US-backed proposal might help pave the way for negotiations had briefly supported the single currency, with both sides signalling a willingness to explore diplomatic avenues.

That momentum faded, however, as renewed Russian strikes and reports that Kyiv and Moscow did not discuss the proposal during talks in Abu Dhabi tempered hopes of a breakthrough.

GBP/EUR Forecast: Eurozone Data to Boost EUR?

Germany’s upcoming consumer confidence figures are likely to be the first key driver for the Euro. Any improvement in sentiment across Europe’s largest economy could help lift the single currency as the month draws to a close.

Broader Eurozone economic morale is also forecast to edge higher in November - a development that may offer EUR an additional layer of support.

The main event, however, will be the release of the European Central Bank’s (ECB) latest meeting minutes. Should they indicate that policymakers are comfortable keeping interest rates steady, the Euro may extend its recovery.

For the Pound, much will depend on how markets digest the UK’s autumn budget. As the implications of higher taxes settle in, and with concerns growing that tighter fiscal policy could weigh on growth and push the Bank of England (BoE) toward more rate cuts, Sterling may find it difficult to maintain its current footing.

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TAGS: Pound Euro Forecasts