British Pound to Euro Forecast: GBP Climbs as Eurozone Growth Concerns Deepen

Modified: Wednesday, 10 June 2026 17:36 BST - Written by Frank Davies

STORY LINK British Pound to Euro Forecast: GBP Climbs as Eurozone Growth Concerns Deepen

The Pound to Euro exchange rate (GBP/EUR) has edged back towards the 1.16 level as Sterling continues to prove surprisingly resilient despite expectations that the European Central Bank will raise interest rates this week. Investors remain cautious over the Eurozone growth outlook, while signs that the UK economy may be weathering the energy shock better than feared have helped limit downside pressure on the Pound.

GBP/EUR Forecasts: Edges Higher

The Pound to Euro (GBP/EUR) exchange rate has edged higher to 1.1580 as narrow ranges have prevailed. The Pound has again been resilient despite expectations of a hawkish ECB rate hike this week with some hopes that the UK economy will be able to ride-out the jump in energy prices.

There are also still concerns over the Euro-Zone economic outlook which has hampered the Euro while net yields have underpinned the Pound with the 10-year yield around 4.93%.

Germany recorded a 0.4% increase in industrial production for April after a revised 0.1% decline the previous month, while industrial orders dipped 3.8%.

ING commented; “All in all, this morning's industrial production data show that the hoped-for industrial rebound in 2026 has been shelved once again. Even the first monthly increase since the war in the Middle East started does not bring new optimism. It is simply too little, and the broader picture still shows a German industry that has stagnated for the last four months.”

It added; “In fact, what only a few months ago looked like the start of a promising year, with improving sentiment, filling order books and significant fiscal stimulus in defence and infrastructure, has once again turned into broken dreams.”

The British Retail Consortium (BRC) reported that like-for-like retail sales increased 3.4% in the year to May, reversing the same decline reported for April.

BRC Chief Executive Helen Dickinson commented;“May’s heatwave drove a surge in outdoor and summer goods.”

She did add; “While the sunshine gave retail a welcome lift, this momentum should not be taken for granted. Household finances remain under pressure, consumer confidence is still fragile, and many retailers continue to face rising costs.”

Ebury chief economist Enrique Díaz-Alvarez commented on the UK outlook; "A notable upward revision in the PMI business indices last week suggests that the initial confidence drop was overstated and that the UK economy is more resilient to the Middle East events than first feared.”

There will continue to be very difficult decisions for the Bank of England (BoE) on growth and inflation grounds.

Danske Bank commented; “Hiking rates will have to be weighed against a considerable risk of exacerbating a looming economic contraction. We think it is most likely the BoE will remain sidelined for the foreseeable future, but the vote split could soon be back where only a slim majority stands in the way of hiking rates.”

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TAGS: Pound Euro Forecasts