British Pound to Euro Forecast: GBP Tests 1.15 as Energy Risks Rise

Modified: Tuesday, 14 April 2026 10:16 BST - Written by Ben Hughes

STORY LINK British Pound to Euro Forecast: GBP Tests 1.15 as Energy Risks Rise

The Pound to Euro exchange rate (GBP/EUR) edged back towards 1.1500 after dipping to 1.1465, with Sterling showing resilience despite rising energy prices and renewed geopolitical tensions.

However, with Middle East risks intensifying and UK economic data looming, markets are questioning whether the Pound can sustain gains or face renewed pressure below the 1.15 level.

GBP/EUR Forecasts: Creep Towards 1.15

The Pound to Euro (GBP/EUR) exchange rate dipped to 1.1465 on Monday before recovering to 1.1500 as the Pound resisted selling pressure, but forthcoming developments in the UK economy could prove crucial.

Energy prices posted sharp gains on Monday in response to weekend Middle East developments which hurt the Euro and Pound. Sterling, however, was broadly resilient, helped by only limited losses for equities while the 10-year bond yield settled just above 4.80%.

According to Scotiabank, there has been some shift in Pound sentiment; “yield spreads are supportive of GBP strength and the options market also reveals a clear moderation in the premium for protection against GBP weakness.”

As far as geo-political developments are concerned, the US and Iran failed to make a breakthrough in peace talks with Vice President Vance returning to the US.

In response, President Trump stated that the US would impose a blockade in the Gulf with the Navy intercepting any ships which had left Iranian ports. This blockade is due to come into effect from Monday afternoon UK time.

There was further uncertainty surrounding shipments through the Strait of Hormuz.

Brent crude jumped around 7% before stabilising while equity markets moved lower.

According to Rabobank; “The US blockade isn’t aimed at stopping GCC energy and goods flowing, which they aren’t anyway, but will stop Iran exporting energy, or importing food, industrial parts, or weaponry by sea.”

The Euro and Pound are both at risk from higher energy prices.

Handelsbanken FX strategist Tommy von Brömsen commented; "Even if we get a resolution to the war, we're still likely to see lingering higher energy prices. I think the pound and the euro are not in a very good seat right now."

Headline inflation will increase which will put pressure on the Bank of England (BoE) to hike rates..

Barclays senior sterling rates strategist Moyeen Islam commented; "The deterioration due to rising energy prices that you've seen in inflationary conditions, or short-term expected inflationary conditions, by the end of the year looks materially worse than it was."

He added; "I find it hard to think back that we can row back to pricing in cuts for 2026."

The BoE, however, will also have to judge wider UK economic conditions and there will be strong pressure to look through higher headline inflation if there is evidence of notable economic weakness.

The latest GDP and industrial production data is due on Thursday, but this will be for the month of February and will not reflect any impact from the Iran conflict.

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TAGS: Pound Euro Forecasts