British Pound to Euro Forecast: GBP Holds Ground Against EUR Amid Global Uncertainty

Published: Tuesday, 13 January 2026 08:00 BST - Written by Tim Boyer

STORY LINK British Pound to Euro Forecast: GBP Holds Ground Against EUR Amid Global Uncertainty

The Pound-to-Euro exchange rate has found support near 1.15 after early losses, as global risk sentiment and geopolitical developments dominated trading.

While renewed concerns over US policy uncertainty briefly supported the euro, Sterling stabilised as UK equities recovered and positioning dynamics offered near-term support.

GBP/EUR Forecasts: Again Finds Support Near 1.15

The Pound to Euro rate dipped in early Europe on Monday, but found support above the 1.1500 level and rallied to 1.1525 after the US open.

There was a dip in risk appetite amid the US Department of Justice move to serve the Fed with subpoenas threatening criminal indictment over Fed Chair Powell’s testimony relating to building cost overruns.

There was strong criticism of the move from Powell and the Euro gained immediate support amid renewed fears over Fed independence.

UK equities also moved lower in an initial reaction, but the UK FTSE 100 index secured a recovery which helped stabilise the Pound.

Position adjustment could underpin the Pound in the short term, but MUFG is still backing a GBP/EUR slide to 1.11 by the end of 2026.

Markets are also monitoring the situation surrounding Greenland with further US insistence that it needed to take control of the country.

ING commented; “On the downside, the US threat of forcefully annexing Greenland remains the big frontier risk for European currencies.”

As far as data is concerned, the Euro-Zone Sentix investor confidence index improved to –1.8 for January from –6.2 the previous month, significantly above consensus forecasts of –5.1 and the strongest reading since July 2025.

Sentix commented; “Investors are starting the new year 2026 with slightly more confidence.”

It added; “In Germany, there is a small silver lining on the horizon at the start of the year. The overall index climbs by 6.3 points to -16.4 points, with the expectations component in particular sending a positive signal with an increase of 6.8 points.”

The Euro will gain some net support if there is sustained confidence in an improved economic performance.

There are no major UK domestic indicators due until next week, although comments from Bank of England officials will be monitored closely with Ramsden and Taylor due to speak during the week.

Markets expect at least one further Bank of England interest rate cut this year while markets are not expecting further ECB rate cuts.

Derek Halpenny, head of research global markets EMEA at MUFG commented; “Narrowing yield differentials between the UK and euro zone should continue to encourage a weaker pound against the euro, lifting the single currency closer to the 0.90 level in 2026.”

He added; “The relationship has broken down recently as the euro/sterling has corrected lower after the Autumn Statement, but we are not convinced this will be sustained.”

Scotiabank sees evidence of increased Euro backing; “Risk reversals are also showing signs of stabilization, offering additional sentiment-related support following an equally erosive pullback.”

As far as COT data is concerned, there was a small decline in short Pound positions to 30,500 contracts in the latest week from 33,200 previously while there was an increase in net Euro longs. This positioning should provide an element of Pound support amid scope for a reduction in Pound shorts.

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TAGS: Pound Euro Forecasts