British Pound to Euro Forecast: Lagarde Resignation Sends GBP to 19-Month High

Modified: Friday, 30 October 2026 07:31 BST - Written by James Fuller

STORY LINK British Pound to Euro Forecast: Lagarde Resignation Sends GBP to 19-Month High

The Pound to Euro exchange rate (GBP/EUR) climbed to fresh 19-month highs as the Euro came under pressure following ECB President Christine Lagarde's surprise resignation.

Pound Sterling also benefited from a calm reaction to Chancellor John Healey's Budget, with UK gilt yields edging lower and markets maintaining strong expectations of a Bank of England rate hike next week.

GBP/EUR Forecasts: 19-Month Highs

The Pound held firm on Thursday with investors still reacting positively to the budget despite long-term fundamental reservations.

Rabobank commented; “The lack of reaction in both the gilts market and the pound to today’s UK budget will thus likely be seen as a measure of its success by UK Chancellor Healey.”

The ECB interest rate decision met expectations, but the Euro was hurt by bank President Lagarde’s resignation.

The ECB held the deposit rate at 2.5%, in line with consensus forecasts.

ING commented; “According to Christine Lagarde, risks to the eurozone’s growth outlook remain tilted to the downside, while risks to the inflation outlook are tilted to the upside. A combination of risks that clearly complicates the ECB’s path ahead.”

Aberdeen Investments Economist Felix Feather commented on Lagarde’s departure; “Lagarde’s resignation is the bigger story than today’s widely expected decision to leave rates on hold.

By stepping down before the French presidential election, her departure means its winner will have no role in choosing the next ECB president — particularly significant given the political and fiscal uncertainty surrounding France.

He added; “We don’t expect the change at the top to alter the near-term rate outlook, but markets will be watching the succession closely as pressure on French government debt persists.”
The UK bond market remained notably calm on Thursday with a slight decline in yields

ING commented; “UK Chancellor John Healey has kept the long-planned fiscal consolidation on track, despite rising borrowing costs. And, crucially, he’s avoided doing anything that could make life decisively harder for the Bank of England (BoE), with a rate hike likely just days away.”

ING added; “The UK’s fiscal consolidation remains in play. And though it’s taking longer than previously expected, it still means Britain is the only G7 economy actually taking steps to improve its deficit.”

According to MUFG; “Medium-term decisions remain deferred to next year's Spending Review. The OBR highlighted some of the pressures in the current plans. The current medium-term path continues to look politically unrealistic and the government faces hard choices ahead.”

There are strong expectations that the BoE will raise rates to 4.00% at next week’s policy meeting.

MUFG added; “For the BoE, we think the direct monetary policy implications are limited. The Budget does not materially alter the outlook for growth or inflation, and the 3.9% National Living Wage increase is tolerably close to likely annual pay settlements. We continue to expect 50bp of tightening on a risk management basis, starting with a hike next week.”

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TAGS: Pound Euro Forecasts