Pound-to-Euro Forecast: GBP Jumps to 10-Week Best EUR Rates

Modified: Tuesday, 6 January 2026 16:46 BST - Written by Tim Boyer

STORY LINK Pound-to-Euro Forecast: GBP Jumps to 10-Week Best EUR Rates

The Pound to Euro exchange rate (GBP/EUR) surged to around 1.1525, reaching ten-week highs as geopolitical unease weighed on the euro while the Pound remained broadly resilient.

The move was driven by risk sentiment rather than yield dynamics, with markets reacting to escalating global political tensions.

Pound Sterling has also drawn modest support from signals of closer UK-EU engagement.

GBP/EUR Forecasts: Hits 10-Week Highs

The Pound was broadly resilient in global markets on Monday with a bounce from initial losses amid hopes for closer EU ties while the Euro lost ground in global markets.

The Pound to Euro (GBP/EUR) exchange rate has jumped to 10-week highs above 1.1525.

At this stage, markets were focusing primarily on geo-political developments following the weekend US Administration move to oust Venezuelan President Maduro and extract him to face trial in the US.

The principal market impact has been a fresh surge in precious metals with limited net gains for oil amid heightened uncertainty over global developments.

There has, however, been some damage to the Euro with markets uneasy over geo-political developments and this has offset potential benefits on yield grounds.

Scotiabank commented; “Yield spreads are climbing and threatening fresh highs, delivering fundamental support to the EUR. The divergence to spot is notable, and suggests some sentiment-driven weakness resulting from this weekend’s geopolitical developments.

It added; “The options market is mirroring the movement in spot, with risk reversals moving in tandem with EUR and softening the premium for protection against EUR strength.”

Equity markets have held steady, although the FTSE 100 index has hit further resistance on approach to the 10,000 level.

There is still the risk of wider uncertainty and instability which could translate into more substantial currency moves.

Rabobank commented on the global risks; “Imposing a stable, pro-US regime is much more difficult than toppling the former. And how will China and other geopolitical rivals respond? Has Trump set a precedent with his claim that the attack was legitimate because Maduro had been indicted in the US? We’re just a couple of days into 2026 and the tone has been set. Buckle up!

As far as data is concerned, the UK reported mortgage approvals of just over 64,500 for November from a revised 65,000 the previous month, although this was above consensus forecasts of 64,000.

There was a stronger increase in consumer credit while net lending increased to £6.6bn from £5.4bn in October.

There are no major data releases until the second half of January.

The Pound may have derived some support from Prime Minister Starmer’s comments that the UK would look to secure closer ties with the EU.

Scotiabank commented; “Domestic releases have been limited to second-tier credit/lending data, suggesting that the pound’s resilience is likely being driven by flows related to geopolitics and reflects the market’s assessment of the strength of the US/UK relationship.”

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TAGS: Pound Euro Forecasts