Pound-to-Euro Forecast: Buyers See Best EUR Rates in One Month

Modified: Friday, 6 March 2026 16:46 BST - Written by Frank Davies

STORY LINK Pound-to-Euro Forecast: Buyers See Best EUR Rates in One Month

The Pound to Euro exchange rate (GBP/EUR) held firm around 1.1542 (+0.3%) after weaker-than-expected US jobs data undermined the dollar, while the Pound to Dollar rate (GBP/USD) climbed to 1.3388 (+0.23%).

Sterling has remained relatively resilient despite lingering concerns over UK growth and volatile energy markets. However, analysts warn the Pound could face renewed downside risk if global bond yields rise again, particularly given the UK’s sensitivity to shifts in gilt markets.

GBP/EUR Forecasts: Above 1.15

The Pound has been resilient in global markets with the Pound to Euro (GBP/EUR) exchange rate trading just below 1.1500. There are still doubts whether the UK fundamentals can sustain Pound support. ING expects GBP/EUR will slide to at least 1.1360.

ING noted recent Pound backing; “We attribute this sterling outperformance to positioning, where asset managers have been (and still are) running large net short sterling positions, while at the same time running long euro positions. Equally, the re-pricing at the short end of the interest rate curve as the market prices out Bank of England easing has helped sterling too.”

There is still a high degree of unease over energy markets with oil and gas prices higher on Thursday.

Susannah Streeter, chief investment strategist at Wealth Club, commented; “The heat has turned up under gas prices again, with the global rally taking off once more. The world’s largest LNG export plant in Qatar remains out of action and the key supply route from the Gulf is disrupted.”

Danske Bank noted that the impacts so far had been limited; “Given the magnitude of the geopolitical shock originating from Iran, the relatively contained reaction across risk assets reflects that markets continue to frame the conflict primarily through the lens of energy supply risk, specifically the potential disruption of oil and gas flows through the Strait of Hormuz.”

Rabobank, however, considered the risks of wider damage if there is sustained disruption; “What begins as an energy supply disruption can rapidly spread through petrochemicals, fertilizers, food production, metals, electricity grids, semiconductors, and ultimately state finances and even public order.

There will also be the risk of financial disruption, especially if there is forced global de-leveraging.

According to ING; “Sterling looks poorly placed should bond markets come under pressure again. One scenario here is that high energy prices curtail or reverse monetary easing cycles, populist governments renew energy subsidies and bond markets get hit. This was the scenario in 2022 which prompted the gilt crisis later in the year.”

Trading in the bond market will, therefore, be watched very closely. The 10-year yield increased to 4.40% on Thursday from 4.38% yesterday.

UK data provided no support for the Pound with the construction PMI index retreating to 44.5 for February from 46.4 previously and the 14th successive month of contraction.

Tim Moore, Economics Director at S&P Global Market Intelligence, commented; "A sharper downturn in house building was the main factor behind the setback for UK construction activity in February, following some signs of stabilisation at the start of 2026.”

The data will increase expectations that the construction sector will be a negative component for first-quarter GDP and damage overall GDP data.

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TAGS: Pound Euro Forecasts