British Pound to Euro Forecast: GBP Climbs as UK Growth Rebounds

Modified: Friday, 24 April 2026 10:01 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Forecast: GBP Climbs as UK Growth Rebounds

The Pound to Euro exchange rate (GBP/EUR) has climbed to three-week highs above 1.1540, supported by stronger-than-expected UK PMI data and higher gilt yields.

However, the upbeat headline figures mask rising cost pressures and weakening business confidence, leaving markets cautious over the UK outlook and limiting the scope for sustained Sterling gains.

GBP/EUR Forecasts: 3-Week High Best for Buyers

The Pound to Euro (GBP/EUR) exchange rate strengthened to 3-week highs above 1.1540 after surprisingly strong UK PMI business confidence data while UK yields moved higher.

The survey did, however, illustrate major challenges to the UK economy and Bank of England with a strong increase in costs. Iran developments, risk conditions and UK evidence will remain key short-term elements for the Pound.

ING still expects GBP/EUR will lose ground; “Our bias remains on the upside for EUR/GBP as we expect further tightening of the front-end rate spread and political risk premium may increase after the 7 May UK local elections.”

The UK PMI manufacturing index strengthened to a 47-month high of 53.6 for April from 51.0 previously and above consensus forecasts of 50.3. The services-sector index also improved to a 2-month high of 52.0 from 50.5 and above expectations of 50.0.

There was strong upward pressure on costs while output charges increased at the fastest rate for over three years. Business confidence also dipped to the second-lowest reading since December 2022.

According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence; “The UK economy has gathered some renewed momentum in April after the initial impact of the war in the Middle East caused growth to stall in March, but the upturn comes with a catch. The improved rate of expansion is in part a reflection of a short-term boost from a rush to secure purchases ahead of feared price rises and supply shortages linked to the war.”

He added; "Prices have spiked higher at a rate not previously seen by the survey outside of the pandemic, suggesting inflation could rise more than many forecasters have been anticipating.”

The Euro-Zone PMI data was mixed with the manufacturing index at a 47-month high of 52.2 for April from 51.6 previously and above consensus forecasts of 50.9. The services-sector index dipped to a 62-month low of 47.4 from 50.2 and below expectations of 49.8.

S&P’s Chris Williamson, commented; “The eurozone is facing deepening economic woes from the war in the Middle East, presenting a major headache for policymakers.”

MUFG commented; “The ECB wants more time to gather more data to better assess the risk of second round effects from higher energy prices and de-anchoring of inflation expectations.”

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