British Pound to Euro Forecast: GBP Slips as Lower Gas Prices Lift EUR

Modified: Tuesday, 28 July 2026 10:21 BST - Written by David Woodsmith

STORY LINK British Pound to Euro Forecast: GBP Slips as Lower Gas Prices Lift EUR

The Pound to Euro (GBP/EUR) exchange rate started the week on the back foot as easing concerns over Europe's energy outlook helped underpin the single currency.

At the time of writing, GBP/EUR was trading at around €1.1698, down slightly from Monday's opening levels.

The Euro (EUR) found modest support on Monday after optimism surrounding a potential fresh US-Iran ceasefire prompted another sharp decline in European natural gas prices.

Sentiment improved after both sides maintained a pause in hostilities over the weekend, with diplomatic negotiations continuing in the background.

The prospect of a sustained de-escalation fuelled hopes that key shipping routes could soon return to normal, easing concerns over energy supplies and driving gas prices lower.

As a result, the Euro recovered some of the ground lost late last week when fears of tighter gas supplies during the winter months had weighed on investor confidence.

Additional support came from Germany's latest IFO business climate survey, which exceeded expectations and pointed to improving confidence among the country's businesses.

The Pound (GBP) traded in a narrow range on Monday as investors monitored developments in the UK bond market.

Sterling was supported by a further decline in government borrowing costs, with the yield on the benchmark 10-year gilt falling back below 5% to its lowest level since Andy Burnham became Prime Minister.

The move suggested investors were growing more comfortable with the new government's fiscal agenda, easing concerns that Burnham's early policy announcements would significantly increase pressure on the UK's public finances.

Near-Term GBP/EUR Forecast: BoE Decision Looms Large for Sterling

Looking ahead, the Pound to Euro (GBP/EUR) exchange rate may remain largely rangebound during the first half of the week as investors await the Bank of England's (BoE) latest monetary policy announcement on Thursday.

While policymakers are widely expected to leave interest rates unchanged, markets will be paying close attention to the bank's guidance for clues on the outlook for monetary policy.

With uncertainty lingering over the inflationary impact of recent geopolitical developments in the Middle East, investors may be reluctant to take strong positions in Sterling ahead of the decision.

Meanwhile, the Euro's direction could remain tied to broader market sentiment until the publication of the Eurozone's preliminary second-quarter GDP figures later in the week.

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TAGS: Pound Euro Forecasts