British Pound to Euro Forecast: GBP Recovers After Peace-Led EUR Rally

Modified: Tuesday, 30 December 2025 07:01 BST - Written by Tim Boyer

STORY LINK British Pound to Euro Forecast: GBP Recovers After Peace-Led EUR Rally

The Pound to Euro exchange rate (GBP/EUR) dipped at the start of the week as renewed optimism over a potential Russia–Ukraine peace agreement lent support to the Euro, although Sterling later pared its losses.

At the time of writing, GBP/EUR was trading near €1.1466, having earlier slid to a one-week low of €1.1447.

The Euro (EUR) found support on Monday as tentative hopes of progress towards ending the Russia–Ukraine war improved sentiment toward the single currency.

Optimism followed talks in Florida on Sunday between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy. After the meeting, Trump said a deal was “closer than ever”, signalling that both sides appeared motivated to bring the conflict to an end.

Markets reacted positively to the comments, with European defence stocks falling back and the Euro gaining as investors leaned into the prospect of reduced geopolitical risk.

However, the Euro’s gains were capped. Trump also acknowledged that several “thorny” issues remain unresolved, particularly around territorial disputes, tempering expectations of any rapid or straightforward breakthrough.

The Pound (GBP), meanwhile, struggled for direction on Monday amid a quiet UK data calendar.

With no notable domestic releases to guide sentiment, Sterling’s performance was driven largely by broader market conditions. The increasingly risk-sensitive Pound initially came under pressure during a mild risk-off phase, before recovering ground as sentiment stabilised.

GBP/EUR Forecast: Russia–Ukraine Developments in the Spotlight

Looking ahead, the sparse end-of-year economic calendar is likely to leave GBP/EUR driven primarily by broader market sentiment rather than fresh data.

For the Euro, developments related to Russia and Ukraine are expected to remain a key influence. Sustained optimism that a peace agreement could be reached in 2026 may continue to underpin EUR. However, any setback — whether through cautious remarks from Trump or the Kremlin, renewed strikes on Ukraine, or heightened security incidents in Europe — could quickly erode support for the single currency.

For the Pound, overall risk appetite is likely to remain the dominant driver. A lift in confidence during thin year-end trading could offer Sterling some support, while a more cautious mood as markets look toward 2026 may see GBP continue to drift without a clear directional bias.

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TAGS: Pound Euro Forecasts