British Pound to Euro Forecast: GBP Reclaims 1.15 as EUR Rally Pauses

Published: Thursday, 29 January 2026 09:00 BST - Written by Tim Boyer

STORY LINK British Pound to Euro Forecast: GBP Reclaims 1.15 as EUR Rally Pauses

The Pound to Euro exchange rate (GBP/EUR) has rebounded above 1.15 as the Euro corrected modestly in global markets after its sharp surge against the dollar.

While the pullback has offered Sterling some relief, banks warn that strong Euro fundamentals continue to cap GBP/EUR upside.

GBP/EUR Forecasts: Reclaims 1.15

The Pound to Euro (GBP/EUR) exchange rate dipped to lows around 1.1475 on Tuesday amid a wider Euro surge before edging back above 1.1500 on Wednesday.

There continues to be tough GBP/EUR resistance above 1.1550. Goldman Sachs is forecasting a near-term retreat to 1.1440.

The Pound has been hampered by wider Euro strength in global markets with the Euro to Dollar (EUR/USD) exchange rate surging to 4-year highs above 1.20.

Global developments and wider Euro moves will remain a key element in the short term. There are no major UK data releases scheduled while immediate domestic political drama has subsided to some extent.

The next central bank meetings will also come into focus with both the Bank of England (BoE) and ECB announcing their latest interest rate decisions next week.

There are strong expectations that both central banks will leave rates on hold, but the latest currency moves could have implications for the rhetoric.

Deutsche Bank chief UK economist Sanjay Raja commented on the BoE; “The bank will want to take a wait-and-see approach, let the dust settle on some of the data."

Markets have noted the potential implications for inflation and concerns within the ECB.

Following the latest surge, markets are pricing in just over a 20% chance of a cut during the Summer compared with around 15% at the beginning of the week.

DZ Bank analyst Rene Albrecht noted the potential for inflation to dip below 2% in the first and second quarters.

He added; "If you add another layer of deflationary impulses from the exchange rate, we can make a case that the ECB might cut once or twice."

Nordea is still positive on the Euro-Zone economy; “Euro-area growth likely ended up accelerating last year, showing notable resilience amidst a lot of uncertainty. While recent PMI data were not spectacular, they do point to continued growth.”

It added; “We continue to think the ECB will keep rates at current levels this year, and see the risk picture gradually moving towards rate hikes, though as the start of the year has reminded us, downside risks have not disappeared either.”

Elsewhere, there were further net gains in French bonds. The 10-year yield spread between German and French bonds dipped to near 55 basis points, its tightest level since French President Emmanuel Macron called a snap election in June 2024.

The decline in yield spreads will tend to underpin the Euro in global markets.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts