Pound to Euro Week Ahead Forecast: 1.173 Today, 1.22 by End-2025

May 5, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: 1.173 Today, 1.22 by End-2025

Foreign exchange analysts at Rabobank expect the Pound to Euro exchange rate to retreat to 1.15 on a 9 to 12-month timeframe. In contrast, Bank of America is forecasting that GBP/EUR will strengthen to 1.22 at the end of this year

GBP/EUR hit 3-week highs near 1.1800 during the week amid optimism of closer EU-UK trade ties and the possibility of a US-UK trade deal, but failed to hold above 1.1765 ahead of the May 8th Bank of England policy meeting.

Rabobank is cautious over the UK growth outlook and noted; “A growth agenda is a good thing, but the British government’s history of announcing grand strategies with much fanfare and little follow-through casts a long shadow.”

It added; “Similarly, calls for increased government spending and investment face the harsh reality of the bond market, which always has an eye on the UK’s twin deficit. It makes it very difficult for the government to finance change, especially with gilt yields as high as they are now.”

The bank also doubts whether the Pound can secure defensive support in global markets.

According to the bank; “The UK’s current account deficit can leave GBP exposed when UK fundamentals are weak. Currently, soft growth and a high level of indebtedness in the UK will not endear the pound to investors.”

It added; “By contrast, Germany’s loosening of its debt brake this year will have renewed investor interest in the Eurozone.”


Bank of America maintains a positive stance towards the Pound; “We expect the UK to enhance alignment with the EU in the interest of national security. Focus on May 19th Brexit Reset Summit.”

Fiscal and monetary policy will also be a key element during the next few months.

There are very strong expectations that the Bank of England will cut interest rates in the week ahead with a 25 basis-point reduction to 4.25% with a minority likely to back a larger cut.

Forward guidance will inevitably be important for the Pound performance.

MUFG commented; “We expect the BoE to sustain the pace of a 25bp cut per quarter over the forecast period. If demand for labour was to continue to weaken it could open up a faster pace of cuts towards the end of the year.”

Standard Chartered expects vulnerability on budget grounds; “we think markets are unlikely to be very forgiving when it comes to the UK’s fiscal position, despite measures outlined in the Spring Budget to restore the fiscal headroom. This does not necessarily mean that the GBP will sell off as aggressively as it did in January, but it may still underperform currencies perceived to be safer, such as the EUR and CHF.”

According to MUFG; “the euro is likely to outperform the pound on greater safe-haven flows as financial market volatility remains more elevated than usual. However, the outperformance for the euro should be modest leaving EUR/GBP in a relatively narrow trading range.”


Danske Bank FX research associate Mohamad Al-Saraf expects risk conditions will dominate; "We think the global investment environment will be the driver for euro-pound in the coming months.”

He added; "If we see elevated uncertainty, widening credit spreads and positive correlation to the negative environment as we believe, we favour a weaker pound.”

The bank expects GBP/EUR will slide to 1.1365 on a 12-month view.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Pound Euro Forecasts