British Pound to Euro Forecast: December BoE Hike Bets Rise to 75%

Modified: Thursday, 12 November 2026 17:31 BST - Written by Frank Davies

STORY LINK British Pound to Euro Forecast: December BoE Hike Bets Rise to 75%

The Pound to Euro exchange rate (GBP/EUR) recovered towards 1.1960 after stronger UK economic data reinforced expectations of another Bank of England interest-rate increase in December.

Third-quarter GDP growth reached 0.7%, its strongest pace in two-and-a-half years, keeping Sterling within striking distance of 1.20 as markets increased bets on further monetary tightening.

GBP/EUR Forecasts: Holding Near Recent Highs

The Pound to Euro (GBP/EUR) exchange rate recovered from recent lows on Thursday after stronger UK growth data reinforced expectations of further Bank of England tightening.

GBP/EUR traded close to 1.1960, remaining near recent highs after finding support around 1.1940 earlier in the week.

The Pound has continued to find support from expectations of higher UK interest rates, while overall Euro sentiment remains relatively fragile.

Key resistance remains around the 1.2000 level, with support around 1.1900.

Strong UK GDP Keeps December BoE Hike in Play

The latest UK growth figures reinforced the case for further Bank of England tightening.

GDP expanded by 0.7% during the third quarter, accelerating from 0.5% in the second quarter and marking the strongest quarterly growth rate in two-and-a-half years.

The result matched consensus forecasts.

September GDP also increased by 0.2%, providing further evidence that the UK economy retained momentum heading into the final quarter.

Annual growth reached 1.9%.

The figures provided support for the Bank of England's decision to raise Bank Rate to 4.00% last week and strengthened speculation that another increase could follow in December.

Markets currently assign around a 75% probability to another quarter-point increase next month.

Bank of England Deputy Governor Clare Lombardelli had already warned that inflation pressures were becoming more persistent.

According to Lombardelli; “The conditions for persistent inflationary dynamics over the medium term are crystallising.”

She added; “In the absence of evidence of weaker inflation pressures, I continue to think there is likely to be a case for a further increase in rates in the near term.”

She also stressed that both December and February remain live meetings.

MPC member Megan Greene has similarly argued that policy should be tightened proactively to prevent elevated wage growth feeding into persistent inflation.

Markets are now pricing three additional BoE rate rises by the end of 2027, with around a 50% probability of a fourth.

Euro Sentiment Remains Fragile

The Euro continues to face a relatively difficult backdrop despite some signs of stabilisation in economic activity.

Political and fiscal concerns remain important across the region, while recent protests over the cost of living have highlighted pressure on governments.

Spain saw its first general strike in 14 years on Wednesday, with more than three million people taking part in demonstrations focused primarily on housing costs and living standards.

The strike caused disruption across transport and manufacturing, although the estimated impact on annual GDP is expected to be relatively modest.

The latest data has also highlighted a continued divergence between the UK and parts of the Eurozone.

While UK growth has remained relatively robust, confidence across parts of continental Europe remains fragile.

For GBP/EUR, the 1.2000 level remains the immediate upside barrier.

A sustained break above this area would strengthen the bullish technical outlook.

On the downside, 1.1900 should provide initial support, with a deeper move lower likely to require either a significant deterioration in UK growth expectations or a substantial reduction in Bank of England tightening bets.

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TAGS: Pound Euro Forecasts