Pound-to-Euro Forecast: GBP Stalls Below 1.16 Ahead of BoE Decision

Published: Wednesday, 18 March 2026 16:00 BST - Written by Tim Boyer

STORY LINK Pound-to-Euro Forecast: GBP Stalls Below 1.16 Ahead of BoE Decision

The Pound to Euro exchange rate (GBP/EUR) held steady around 1.1580, struggling to break above the key 1.1600 resistance level as markets await crucial guidance from the Bank of England and ECB.

With energy prices still elevated and economic uncertainty high, traders are focused on central bank rhetoric to determine whether Sterling can extend gains or face renewed downside pressure.

GBP/EUR Forecasts: Consolidation

The Pound to Euro (GBP/EUR) exchange rate has consolidated around 1.1580 with no further attack on the key 1.1600 resistance area. The Pound has, however, remained resilient with some relief in the UK bond market with the 10-year yield edging lower to 4.65% while equities have made gains.

Energy prices, together with the forthcoming interest rate decisions from the Bank of England (BoE) and ECB, will remain crucial for GBP/EUR moves as the banks attempt to assess economic risks.

ING is still backing medium-term BoE rate cuts and GBP/EUR losses to 1.11 on a 12-month view.

There are now strong expectations that the BoE and ECB will both keep interest rates on hold this week with the comments on the outlook and net inflation risks liable to be key elements.

As far as the UK is concerned, the latest labour-market data is scheduled for release on Thursday, a few hours ahead of the Bank of England (BoE) policy announcement.

The data is unlikely to influence the decision with strong expectations that uncertainty will ensure no change in rates this week, but soft data could trigger speculation over a move at the April meeting.

Bank of America (BoA) no longer expects a rate cut at this week’s policy meeting and is now backing two cuts in June and September, but has low conviction in the updated call.

BoA commented; “The speed at which geopolitical developments have moved suggests that the BoE is firmly in wait and see mode, consistent with recent market re-pricing. Until there is a clear read across data and potential government announcements to circumvent potential cost of living headlines, GBP is likely to remain beholden to broader FX trends.”

It added; “For now GBP has been resilient. This could be put to the test at the start of May ahead of the local elections.”

There will be important Euro-Zone economic risks.

The German ZEW economic sentiment index dipped sharply to -0.5 for March from 58.3 the previous month and substantially below expectations of 39, although there was a net improvement in the current conditions component to -62.9 from -65.9 previously.

According to the institution; "The ZEW Indicator has collapsed. The escalation in the Middle East spikes energy prices and increases inflationary pressure. This heightens the risk for the German economy that the emerging trend of economic recovery will slow down.”

It added; “How strong these effects will turn out depends on the intensity and the duration of the conflict.”

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TAGS: Pound Euro Forecasts