British Pound to Euro Forecast: GBP Held Below 1.15 as UK Risks Build

Modified: Tuesday, 21 April 2026 11:06 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Forecast: GBP Held Below 1.15 as UK Risks Build

The Pound to Euro exchange rate (GBP/EUR) remained capped below 1.1500, holding near 1.1490, as markets stayed cautious ahead of key UK data releases and ongoing political uncertainty.

With pressure building on Prime Minister Starmer and downside risks to the UK economy, GBP/EUR remains vulnerable, particularly if this week’s data reinforces expectations of a more cautious Bank of England.

GBP/EUR Forecasts: Waiting for Crucial Economic Data Releases

The Pound to Euro rate was held below 1.1500 on Monday, but did prove resilient and settled around 1.1490 with markets watching Iran developments closely and waiting for key economic releases this week.

ING is still backing Pound losses and has a GBP/EUR forecast of 1.1360 on a 3-month view with further losses to 1.11 on a 12-month view.

Political developments will be important in the short term with Prime Minister Starmer still under pressure amid a fresh frenzy of speculation surrounding the Mandelson scandal. A top civil servant, dismissed by Starmer last week, is scheduled to appear before the House of Commons on Tuesday.

The reaction of Labour MPs to the latest comments from Starmer will be important for Pound sentiment.

The local elections will also be held on May 7th with expectations that the Labour Party will suffer notable losses.

According to MUFG; “The latest developments have re-heightened speculation over a potential leadership challenge after the local elections if the Labour party performs poorly.”

It added; “So far the negative impact on the pound has been limited, but UK political developments have the potential to trigger a sharper sell-off in the month ahead.”

Economic developments will also be important. As far as fiscal policy is concerned, Germany is poised for substantial stimulus while the UK is still struggling to avoid a net tightening.

ING commented; “the eurozone should enjoy some fiscal stimulus, whereas UK fiscal headroom remains constrained. Regarding fiscal, local elections in May continue to present risks to the current Labour leadership – with any new government moving to the left.”

There are important UK data releases this week with the Labour-market data on Tuesday with the data on payrolls watched closely.

Inflation data will be released on Wednesday with the headline inflation rate forecast to increase to 3.3% from 3.0% with the core rate holding at 3.2%.

The latest PMI business confidence data is scheduled for release on Thursday with expectations of slightly weaker figures for April.

There are expectations that the Bank of England (BoE) will hold interest rates at 3.75% next week with markets pricing in at least one rate hike this year.

Notably weak data, especially for the PMI release, would increase pressure for the BoE not to increase interest rates.

According to Danske Bank; “We now expect the BoE to remain on hold throughout 2026 and 2027 and see relative rates as a slight positive for EUR/GBP.”

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TAGS: Pound Euro Forecasts