Pound to Euro Exchange Rate Forecast: ECB Meeting Set to Test GBP

Modified: Tuesday, 9 June 2026 15:11 BST - Written by James Fuller

STORY LINK Pound to Euro Exchange Rate Forecast: ECB Meeting Set to Test GBP

The Pound to Euro exchange rate (GBP/EUR) continues to show notable resilience, holding above the 1.1550 level despite fading Bank of England rate-hike expectations and a cautious global market backdrop.

Investors are now turning their attention to this week's European Central Bank decision, which could provide the next major test for Sterling after several weeks of surprisingly robust performance.

GBP/EUR Forecasts: Hold Above 1.1550

The Pound to Euro (GBP/EUR) exchange rate has again found support close to 1.1550 and is trading around 1.1570.

Risk appetite remains vulnerable with weaker equities, but the Pound has again resisted selling pressure at this stage.

The UK 10-year bond yield has increased to 4.95% on Monday. Higher yields will make it expensive to sell the Pound, but there will be fresh concerns over UK fundamentals.

Scotiabank has registered a slight shift in sentiment; “risk reversals hint to a renewed softening in sentiment with a modest rise in the premium for protection against GBP weakness.”

According to ING, GBP/EUR is likely to edge lower towards 1.1520; “Given what should be a hawkish ECB meeting this week and a vulnerable equity environment ahead of large forthcoming supply, we favour EUR/GBP making a move back to 0.8680.”

Bank of America is more positive on the Pound due to evidence of strong AI-related investment inflows into the UK. According to the bank; “Further out, a higher productivity/capital intensive mix of FDI inflows should be seen as a medium-term positive for GBP valuation trends.”

There are strong expectations that the ECB will increase interest rates this week. Danske Bank commented; “We expect the ECB to hike the deposit rate by 25bp to 2.25% in line with consensus and markets. We expect Lagarde to keep full optionality on the future policy rate path, including a potential summer hike but not pre-committing.”

In contrast, markets are not expecting a Bank of England(BoE) rate hike this month.

The latest UK inflation data will not be released until next week, although the latest GDP data on Friday will be watched closely. Consensus forecasts are for a 0.1% decline for April after a stronger-than-expected 0.3% increase for March.

The latest BoE Decision Maker Panel survey was released late last week with important evidence on company pricing.

ING commented; “Friday's release of inflation expectations data amongst the corporate community also gives the BoE some confidence that second-round inflation effects are less likely.”

It added; “The scope for higher oil prices to trigger so-called "second-round" effects on inflation is much more limited. And based on what firms are saying about their "realised" price decisions, we'd expect services inflation to stay below 4% this year.”

ING summarised; “It looks as though the Bank of England will try to avoid tightening this year.

Given that markets are pricing in over a 75% chance of a rate hike by September, a shift in expectations would tend to undermine the Pound.

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TAGS: Pound Euro Forecasts