Pound to Euro Week Ahead Forecast: 1.19 Today, 1.15-1.2050 in 12 Months

May 18, 2025 - Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: 1.19 Today, 1.15-1.2050 in 12 Months

Foreign exchange analysts at Danske Bank are backing a retreat in the Pound to Euro (GBP/EUR) exchange rate to 1.15 on a 12-month view as hostile global conditions undermine the Pound.

In contrast, Credit Agricole expects that GRP/EUR will strengthen to 1.2050.

GBP/EUR challenged 1.19 resistance throughout the week, but was unable to break through and settled just below this level.

At this stage, Danske is still betting that the UK economy will out-perform the Euro area and noted; “we see domestic factors and the relative growth outlook between the UK and the euro area as GBP positives.”

The bank, however, is now more cautious over the outlook with the potential for reduced net Pound support; “We expect the expansionary fiscal stance and a loosening of monetary conditions to boost the economy in 2025, but to a lesser extent than previously assumed given increased trade frictions.”

On monetary policy it commented; “We continue to expect the BoE to deliver the next 25bp cut in August and deliver quarterly rate cuts at the meetings associated with updated economic projections. We see the risk as skewed towards a swifter cutting cycle amplified by trade war.”

Crucially, the bank expects global financial conditions will dominate and will act as a drag on the Pound; “An investment environment characterised by elevated uncertainty, widening credit spreads and a positive correlation to a USD negative environment, in our view, favours a weaker GBP. The UK runs a large current-account deficit, which makes GBP vulnerable when capital inflows fade.


Economic data will be a key focus in the week ahead.

The latest inflation data will give fresh insight into Bank of England expectations.

The latest PMI business confidence data will also be released for the UK and Euro-Zone.

The evidence of tariff-related stresses and wider outlook will be very important for Pound sentiment.

Credit Agricole is positive on the Pound outlook; “Evidence that the UK’s economic outlook is proving more resilient than expected could encourage investors to reassess their BoE rate cut expectations and give the relative rate appeal of the GBP a boost.

It added; “In addition, 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.”

The bank is also cautious over the Euro-Zone outlook.


It added; “While the business sentiment data could point at a brightening up of the Eurozone outlook we believe that the ECB would maintain its very cautious outlook and thus should keep Eurozone rates investors expecting further easing ahead. The relative rate disadvantage of the EUR could linger as a result and add to the downside risks to its near-term outlook.”

ING expects mixed influences on the Pound.

It discusses the potential for greater co-operation with Europe and commented; “Both sides want to run with this theme, although PM Starmer is wary of the strong gains in the pro-Brexit reform party in recent local elections. Yet closer ties with Europe look likely this summer, helping GBP.”

Among other things it expects a Security and Defence Pact and commented; “We’re not quite ready to call for it, but this could all mean we see 0.82.” (1.2200 for GBP/EUR).

The bank is, however, still cautious; “Holding us back from being more bullish on GBP is the fact that UK inflation data can decelerate, and the BoE can turn more dovish.”

It forecasts a GBP/EUR retreat to 1.1630 at the end of this year.

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TAGS: Currency Predictions Pound Euro Forecasts