British Pound to Euro Forecast: GBP Firms Above 1.15 Post-CPI Data

Modified: Wednesday, 22 April 2026 07:46 BST - Written by Ben Hughes

STORY LINK British Pound to Euro Forecast: GBP Firms Above 1.15 Post-CPI Data

The Pound to Euro exchange rate (GBP/EUR) has edged back above 1.1500, trading near 1.1505, after UK inflation data met expectations but failed to deliver a fresh boost for Sterling.

March CPI rose to 3.3% year-on-year, while core and services inflation cooled, reinforcing expectations that the Bank of England will remain cautious on further tightening

GBP/EUR Forecasts: Avoiding a Sell-Off

The Pound remains resilient despite a sharp sell-off in government bonds and the Pound to Euro (GBP/EUR) exchange rate has consolidated around 1.1480 with no major impact from mixed UK jobs data ahead of Wednesday’s inflation data.

MUFG still expects Pound losses to 1.1240 by the end of this year.

Markets are continuing to monitor political developments and the on-going threat to Prime Minister Starmer from the Mandelson scandal. Labour Party MPs will be very reluctant to challenge Starmer before the May local elections unless there are further bombshell revelations.

ING commented; “the Polymarket betting site only gives a 39% probability of PM Starmer leaving office by June (65% by December) and is perhaps one reason why sterling is not selling off more.”

MUFG did note; “The GBP could weaken further if speculation intensifies around a potential leadership challenge to PM Starmer in the month ahead.”

There will, however, be fresh concerns over the UK bond market with a sharp sell-off on Tuesday with the 10-year yield jumping to around 5.10%, the highest level since 2008.

As far as data is concerned, the ONS reported that the number of people on payrolls declined a provisional 11,000 for March after a 6,000 drop for February.

There was a decline in the unemployment rate to 4.9% in the three months to February from 5.2% previously, but the inactivity rate increased and vacancies resumed their decline.

Headline annual earnings growth slowed to 3.8% from 4.1%, although slightly above consensus forecasts of 3.6% with underlying earnings slowing to 3.6% from 3.8%, the lowest reading for over five years.

RSM chief economist Thomas Pugh commented; “All this suggests that despite the fall in the headline unemployment rate, the labour market remained weak going into the energy crisis.”

MUFG added; “The soft labour market prior to the energy price shock provides some reassurance over the upside inflation risks. We are currently forecasting only one rate hike from the BoE.” ING expects no rate hikes from the BoE.

Latest data also illustrated Euro-Zone risks. The German ZEW economic sentiment index dipped to -17.2 for April from -0.5 previously and compared with consensus forecasts of -6.5.

The ZEW commented; “The economic consequences of the Iran war for the German economy go far beyond price increases: Businesses are concerned about long-term shortages of energy supply, and this discourages investment and weakens the effect of government stimuli.”

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TAGS: Pound Euro Forecasts