British Pound to Euro Forecast: GBP Slides as UK Growth Concerns Build

Modified: Thursday, 24 September 2026 12:21 BST - Written by James Fuller

STORY LINK British Pound to Euro Forecast: GBP Slides as UK Growth Concerns Build

The Pound to Euro exchange rate (GBP/EUR) has slipped below 1.1650 to around 1.1635 as mixed UK business surveys and persistent concerns over government debt weigh on Sterling.

The Euro has also gained support from surprisingly resilient Eurozone activity, strengthening expectations that the ECB could raise interest rates again before year-end.

GBP/EUR Forecasts: Losing Ground

The Pound to Euro (GBP/EUR) exchange rate has dipped on Wednesday amid mixed UK data and on-going unease surrounding UK debt levels.

Twice this month, GBP/EUR has bounced from dips below 1.1620 with markets watching the price action closely if there is a further test of support.

The latest Euro-Zone economic data suggested economic resilience, potentially supporting the Euro, but there are further concerns surrounding debt dynamics, especially in France.

According to flash data for September, the UK manufacturing index strengthened to a 3-month high of 52.0 from 51.7 previously and above consensus forecasts of 51.5.

The services-sector index, however, retreated to a 3-month low of 51.7 from 52.5 and below market expectations of 52.0.

There was further strong upward pressure on costs and output charges increased at the fastest rate since June.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence issued a relative downbeat assessment of the outlook; “September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs meanwhile continuing to discourage hiring.

He added; "While the upturn in the survey’s price gauges suggest the Bank of England looks likely to keep a hawkish bias, the worryingly lacklustre pace of business growth underscores the risk to the economy from higher borrowing costs.”

The OECD has upgraded its 2026 GDP growth forecast to 1.1% from 0.9% previously while the inflation forecast has been cut to 3.1% from 3.7%, although the 2027 growth forecast has been lowered slightly to 1.0% from 1.1%. The OECD also warned over excessive debt levels.

Matthew Ryan, head of market strategy at Ebury commented; "Growth in Britain’s economy has been remarkably resilient so far this year, though we think that a slowdown is almost inevitable during the remainder of the year.”

The Euro-Zone PMI manufacturing index was unchanged at 52.7, although the output index hit a 55-month high while the services-sector index strengthened to a 10-month high of 53.0 from 51.6 and above forecasts of 51.4.

S&P Global Market Intelligence’s Chris Williamson commented; “The resilience of economic growth amid the headwinds of geopolitical issues and rising prices will likely embolden the ECB to hike interest rates again before the end of the year, adding to the case for rates to rise sooner rather than later to put an October hike very much on the table.”

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TAGS: Pound Euro Forecasts