Pound Sterling to Euro Forecast: GBP Under 1.19 Resistance, FTSE Gains

May 16, 2025 - Written by Tim Boyer

STORY LINK Pound Sterling to Euro Forecast: GBP Under 1.19 Resistance, FTSE Gains

GBP/EUR has consolidated around 1.1875 with a firm tone, but again unable to break the 1.1900 resistance area.

The Pound to Euro exchange rate (GBP/EUR) has failed to break above 1.1900 for five successive days, but there will be speculation that optimism surrounding Monday’s UK-EU summit will trigger a move.

UBS commented; “we expect EURGBP to stay around 0.84, with temporary dips below.” (Around 1.19 for GBP/EUR with temporary moves higher.)

The UK FTSE 100 index hit a 7-week high on Friday amid a net improvement in risk appetite helping to underpin sentiment.

Rabobank senior market economist Teeuwe Mevissen commented; "There is a sort of renewed stability regarding the trade war and some more certainty for at least the coming time ahead helps stocks, but it's also fair to say that looking at stock markets now, it also seems that they're waiting for a new catalyst for further movements."

The Pound will tend to make gains when risk conditions are favourable.

There are important domestic UK events next week, starting with the EU-UK summit on Monday.


There will be speculation of pledge for closer cooperation, especially on defence and security and hopes of closer economic ties with a lowering of trade barriers.

According to Credit Agricole; “the UK-EU summit could fuel hopes for further rapprochement between the two and thus for further abatement of the post-Brexit headwinds for the UK economy. We continue to expect the GBP to outperform its European peers.”

It sees scope for GBP/EUR gains towards 1.2050.

As far as data is concerned, the latest inflation data will be released on Wednesday.

This is a particularly important set of data given the annual indexing of service-sector prices. This release will be important for Bank of England policy expectations.

The latest PMI business confidence data is also due for release on Thursday with the UK, Euro-Zone and US data all important for the Pound.

UBS commented; “The CPI print for April and forward-looking activity indicators, such as the flash PMIs for May, will be more important. Solid wage growth could keep inflation on the elevated side, with positive activity spillover effects keeping PMIs stable, despite tariff concerns.”


Firm UK data would underpin the Pound

The Euro-Zone data will also be important for ECB policy expectations.

According to UBS; “we do not anticipate a significant impact on the euro unless the PMIs deliver a notable downside surprise.”

Danske Bank noted relatively hawkish comments from ECB council member Schnabel this week which could signal wider resistance to aggressive interest rate cuts within the council.

According to Danske; “We anticipate the ECB will cut into accommodative territory of 1.5% by September due to inflation being at target and low market-based inflation expectations. But we note the upside risks to the call, especially on our expectations for a cut in July due to the hawk camp’s resistance to moving too fast.”

ECB reluctance to cut rates would tend to curb GBP/EUR support.

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TAGS: Pound Euro Forecasts