Pound to Euro Week Ahead Forecast: Super Thursday Brings Major Test for GBP

Modified: Monday, 15 June 2026 07:31 BST - Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: Super Thursday Brings Major Test for GBP

The Pound to Euro exchange rate (GBP/EUR) remained trapped below the key 1.1600 level as investors brace for a potentially pivotal week featuring both the Bank of England policy decision and the closely watched Makerfield by-election.

With monetary policy and UK politics converging at the same time, markets are preparing for increased volatility in Sterling as traders assess the outlook for interest rates, fiscal policy and economic growth.

GBP/EUR Forecasts: BoE call next

Danske Bank is still forecasting a slide in the Pound to Euro (GBP/EUR) exchange rate to 1.1240 on a 12-month view.

GBP/EUR edged higher on the week, but was unable to break above the important 1.16 level.

Politics and economics will collide this week on Super Thursday with the Bank of England (BoE) policy decision and Makerfield by-election. The political temperature increased again late in the week after the Defence Secretary resigned.

Bank of America commented; "The upcoming Makerfield by-election on 18 June is the next key event for UK's political and fiscal outlook. There are many scenarios, but if Andy Burnham were to win, he would be eligible to stand in a Labour leadership contest, in which a Survation poll indicates he is favourite to win.”

The BoE will announce its interest rate decision this week with consensus forecasts that rates will be held at 3.75%.

There are expectations of a split vote, but with a majority decision to hold rates with 2-3 dissenters, including chief economist Pill, voting for a rate hike.

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.”

Beyond the June meeting, developments in the Middle East will also be a key element, especially given the impact on energy prices and inflation expectations.

ING commented; “If disruption in the Strait of Hormuz hasn’t eased by the July meeting, the Bank will also have to lean more heavily against the tail risks, however unlikely, that the disruptions extend into the autumn. Policymakers are acutely aware that the longer this lasts, the greater the risk of second-round effects.”
The bank added; “Against that backdrop, we think the BoE will tilt towards a July hike. It’s not a done deal – and a faster resolution that avoids the renewed spike in oil and gas prices we’re now forecasting would more easily justify a prolonged pause.”
The ECB increased interest rates at the June meeting a 25 basis-point increase in the deposit rate to 2.25%. There were suggestions from the bank that would not increase rates again in July unless there was a further surge in oil prices.

Several investment banks expect a further hike in September, but there will be important economic concerns. The IMF is downbeat over the outlook; "Following a period of growth at potential and inflation on target, the euro area outlook has weakened.”

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TAGS: Pound Euro Forecasts