British Pound to Euro Rate Forecast: GBP/EUR Sub-1.16

Modified: Wednesday, 25 March 2026 09:46 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Rate Forecast: GBP/EUR Sub-1.16

The Pound to Euro exchange rate (GBP/EUR) is consolidating near 1.1560 after failing to break above the key 1.16 resistance level, with both currencies constrained by weak economic data and elevated energy risks.

While a pullback in UK bond yields has provided some near-term relief for Sterling, slowing services activity and rising stagflation concerns on both sides of the Channel are limiting upside momentum.

GBP/EUR Forecast: Consolidation

The Pound to Euro (GBP/EUR) exchange rate is consolidating around 1.1560 after hitting resistance close to 1.16.

The pair is still contained in relatively narrow ranges given that the UK and Euro-Zone economies are both vulnerable. Data releases on Tuesday illustrated this point with a notable slowdown in the services sector. The Euro area is more vulnerable to higher import costs, but overall UK fundamentals are weaker.

Inflation data due for release on Wednesday will not show any impact from the Iran conflict with the headline rate expected to remain at 3.0%.

There was significant relief in the UK bond market on Monday with the 10-year yield retreating sharply from 18-year highs above 5.10%. Yields, however, are still near 4.90% and sharply higher than 4.25% seen before the Iran war.

ING still expects that GBP/EUR will hit tough resistance above 1.16.

Goldman Sachs sees scope for short-term resilience, but added; “All told, ultimately do not think the currency has been relieved of the medium-term headwinds that should come back into play in the
months ahead.” It has a 6-month GBP/EUR forecast of 1.1360.

The UK PMI manufacturing index edged lower to a 3-month low of 51.4 from 51.7 the previous month while the services-sector index retreated to a 6-month low of 51.2 from 53.9.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented; “The war in the Middle East has hit the UK economy in March, stalling growth while driving inflation sharply higher.”

He added; “The full impact on inflation and economic growth depends not just on the duration of the war but also the length of disruptions to energy markets and shipping. The Bank of England faces a challenging period where it will need to balance these growth and inflation risks when setting policy.”

ING commented; “Our UK economist also feels the bar is exceptionally high for the Bank of England to hike the already restrictive policy rate, and it may well be that softer activity data takes some of the sting out of BoE tightening expectations.”

The Euro-Zone PMI manufacturing index improved to a 45-month high of 51.4 for March from 50.8 while the services-sector index retreated to a 10-month low of 50.1 from 51.9 previously.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented; “The flash Eurozone PMI is ringing stagflation alarm bells as the war in the Middle East drives prices sharply higher while stifling growth.”

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