British Pound to Euro Forecast: GBP Holds 4-Week Best Ahead of BoE Decision

Modified: Tuesday, 28 April 2026 10:31 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Forecast: GBP Holds 4-Week Best Ahead of BoE Decision

The Pound to Euro exchange rate (GBP/EUR) is holding near four-week highs around 1.1540, with markets cautious ahead of key Bank of England and ECB policy decisions.

Sterling’s direction remains finely balanced, with central bank guidance, UK political tensions, and energy price developments all set to drive volatility in the near term.

GBP/EUR Forecasts: Holds Near 4-Week Highs

The Pound-to-Euro rate was unable to re-test 4-week highs above 1.1550 on Monday and edged lower to 1.1540 as tight rangers prevailed.

Central bank meetings and on-going UK political tensions will tend to dominate in the week ahead with risk appetite and energy prices also key elements in a huge week for Sterling.

Looking at the medium-term political ramifications if Starmer is ousted, JP Morgan considers that GBP/EUR can slide to 1.1240 if there is a shift in fiscal policy while a commitment to policy stability could trigger gains to 1.1765.

The ECB is expected to hold the deposit rate at 2.00% this week while warning over potential inflation risks.

Consensus forecasts are for the Bank of England (BoE) to hold interest rates at 3.75% this week with the bank facing a tough communication task given uncertainty over the extent of upside inflation risks and the downside growth threat.

MUFG expects the bank will have to address inflation fears; “While the BoE will want to avoid another outsized hawkish market reaction similar to after last month’s MPC meeting, it will be difficult to avoid providing another hawkish policy message with limited room to look through the inflation shock.”

It also expects a split vote; “We expect a hawkish hold this week with two MPC members Chief Economist Pill and MPC member Mann voting for a hike.”

A hawkish statement would provide an element of Pound support.

There are important economic risks, illustrated by the CBI retail sales survey which dipped sharply to a record low of -68 for April from -52 previously and below consensus forecasts of -40. Sales are forecast to slide again in May.

CBI Lead Economist Martin Sartorius commented; “Retail conditions deteriorated in April, with sales momentum weakening noticeably against a backdrop of fragile consumer confidence.
Political tensions will tend to increase ahead of the May 7th local elections with further rumours that Prime MInister Starmer will face a leadership challenge.

According to MUFG; “Domestic political developments have the potential to trigger at least a temporary sell-off for the pound in the coming weeks.”

JP Morgan does not expect any UK Labour leadership contest will be completed until the Autumn and, in the meantime, the bank considers that the Pound can gain support on yield grounds, especially as recent data has been solid.

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TAGS: Pound Dollar Forecasts