Pound to Euro Price Forecast: Can GBP Hold Above 1.15?

Modified: Friday, 23 January 2026 15:16 BST - Written by David Woodsmith

STORY LINK Pound to Euro Price Forecast: Can GBP Hold Above 1.15?

The Pound-to-Euro exchange rate (GBP/EUR) rebounded toward 1.1500 as easing Greenland tensions lifted global risk appetite, offsetting a firmer euro and refocusing attention on UK fiscal data and the interest-rate outlook.

GBP/EUR Forecasts: Rebounds to 1.1500

After hitting 3-week lows below 1.1450, the Pound to Euro (GBP/EUR) exchange rate has rebounded to test the 1.1500 level amid a rebound in global risk conditions.

The potential for GBP/EUR gains was curtailed to some extent by a firmer Euro.

The domestic data releases will also need to be watched closely to assess the potential for sustainable Pound gains with the PMI business confidence data due on Friday. Fiscal and monetary policy trends will also be important for the Pound.

There are major GBP/EUR resistance levels above 1.1550.

The Pound has bounced back in global markets with a strong boost to equities following President Trump’s announcement that additional tariffs on eight European economies from February 1st would not go ahead.

This announcement followed reports of a framework deal between Trump and NATO Secretary General Rutte on Greenland, although there are no significant details at this stage.

The latest UK public finances data also helped underpin the Pound.

The UK government borrowing requirement declined sharply to £11.6bn for December from £18.7bn the previous year.

For the first nine months of fiscal 2025/26, the deficit declined marginally to £140.4bn from £140.7bn the previous year, although this was still 4.6% of GDP.

ONS senior statistician Tom Davies commented; “Borrowing in December was substantially down on the same month in 2024, as a result of receipts being up strongly on last year whereas spending is only modestly higher.”.

Capital Economics deputy chief UK economist Ruth Gregory commented that public finances were; "finally showing signs of improvement in recent months". She did add; “the big picture is that the pace of deficit reduction remains very slow."

Debt interest payments still amounted to £9.1bn from £8.9bn the previous year.

KPMG senior economist Dennis Tatarkov commented; “Higher interest rates continue to pose a challenge to the UK’s public sector finances,”

The CBI industrial trends survey showed only a marginal improvement to -30 from -32 the previous month. There was a stronger improvement in the CBI retail sales survey to -17 from -44 previously.

Consensus forecasts are for a slight net improvement in the December PMI indices for the Euro-Zone and UK.

According to Deutsche Bank chief UK economist Sanjay Raja "Despite the uptick in the consumer price index, we still see Bank Rate on a downward direction."

At this stage, the bank is backing two further rate cuts this year, but he added; "However, we see risks as skewed to slower easing in the first half of 2026.

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TAGS: Pound Euro Forecasts