British Pound to Euro Forecast: Can GBP/EUR Break to 8-Week Best?

Modified: Tuesday, 23 December 2025 10:01 BST - Written by Frank Davies

STORY LINK British Pound to Euro Forecast: Can GBP/EUR Break to 8-Week Best?

The Pound to Euro exchange rate (GBP/EUR) edged up to around 1.1440, supported by a reduction in speculative short positions that leaves scope for further near-term short covering.

A break above 1.1465 would open the door to eight-week highs, particularly in thin year-end trading.

However, weak UK growth trends and expectations of further BoE easing continue to cap confidence.

GBP/EUR Forecasts: Beyond Multi-Month Highs?

The Pound to Euro rate secured a net gain to near 1.1440 ahead of the festive period.

The latest COT data, released by the CFTC, recorded a decline in short speculative positions to 75,500 contracts from over 93,000 the previous week, but this still represents a substantial negative position and the potential for near-term short covering as underlying trading volumes decline.

Markets will be looking at the potential for gains to 1.1465 and any break above this level would represent a move to 8-week highs.

There are still important doubts surrounding the fundamental UK position.

According to the ONS, UK GDP growth was conformed at 0.1% for the third quarter of 2025 with annual growth also unchanged at 1.3%, although there was a slight downgrade to the second quarter at 0.2%

ONS director of economic statistics Liz McKeown commented; “Today’s updated figures paint the same picture as our initial estimate, with growth continuing to slow in the third quarter. Growth in services were partially offset by falls in production, with a marked drop in car manufacturing.”

Quilter investment strategist Lindsay James does not expect the budget will support the economy.

According to James; “Instead, the government is going to have to hope that previous measures taken to date begin to bear fruit, or that geopolitical challenges calm down enough that global trade can rebound.

He added; “Unfortunately, neither seems particularly encouraging right now and as such the first half of next year is likely to be more of the same, if not worse with the spectre of recession beginning to loom.”

Matt Swannell, chief economic advisor to the EY ITEM Club, expects a further dependence on government spending; “Current spending plans should sustain the public sector’s significant role in 2026, but the absence of a sustainable growth driver remains a problem for the UK economy.”

Bank of England policy will remain a key talking point for next year.

MUFG sees scope for a further easing of monetary policy; “Concerns over persistent inflation risks in the UK should ease further amid a loosening labour market. Headline inflation is set to move back toward the BoE’s target during the first half of next year, partly due to government Budget measures. Slowing wage growth would give policymakers more confidence to lower rates further.”

Danske Bank also discussed the outlook for interest rates; “The MPC remains highly split in two camps and commentary from the dovish camp highlights that a cutting cycle could well extend. We expect the BoE to deliver the next cut in the Bank Rate in April but see risks of the cut being delivered quicker.”

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TAGS: Pound Euro Forecasts