Pound to Euro Dips

Modified: Monday, 16 March 2026 21:16 BST - Written by David Woodsmith

STORY LINK Pound to Euro Dips

The Pound Euro (GBP/EUR) exchange rate ticked slightly lower as investors continued to assess the latest developments in the war in Iran and the potential implications for the global economy.

At the time of writing, GBP/EUR was trading at around €1.1565, down marginally from its opening levels.

The Euro edged higher as investors responded to the latest headlines surrounding the crisis in the Middle East.

Market sentiment improved after reports that the US plans to unveil an international naval coalition aimed at protecting shipping in the Strait of Hormuz. The prospect of increased security along the key trade route helped to ease fears over energy supplies, prompting oil prices to retreat and the US Dollar to weaken.

The Euro drew some support from this shift, partly due to its inverse relationship with the US Dollar and renewed hopes that the Eurozone economy may avoid the worst effects of rising global energy costs.

That said, gains for the single currency remained limited. With little in the way of fresh Eurozone economic data and lingering geopolitical risks still in play, investors remained cautious despite the more optimistic tone.

The Pound traded in a mixed fashion as the absence of notable UK economic data left Sterling lacking clear direction.

However, the currency faced some mild pressure following a new outlook from Goldman Sachs. Economists at the investment bank suggested that the Bank of England could deliver two interest rate cuts in 2026, pencilling in reductions in both July and November.

This forecast diverges from current market pricing, which indicates that investors expect borrowing costs to edge higher by around 25 basis points over the next year.

The more dovish tone of Goldman’s prediction appeared to weigh slightly on Sterling sentiment.

Short-Term GBP/EUR Forecast: German ZEW Sentiment in Focus

Germany’s latest ZEW economic sentiment index will be the main focus for Euro investors.

Economists expect the survey to show a sharp decline in confidence this month. Such a drop could intensify concerns about the outlook for the Eurozone’s largest economy and place fresh pressure on EUR exchange rates.

Meanwhile, with little in the way of UK economic releases in the early part of the week, broader market sentiment may guide movement in the Pound.

Even so, fluctuations in GBP/EUR could remain relatively limited as investors look ahead to upcoming Bank of England and European Central Bank policy signals, when officials may address the inflation risks stemming from the ongoing conflict in Iran.

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TAGS: Pound Euro Forecasts