Pound to Euro Forecast: GBP Bounces, Buy vs EUR Below 1.1450 say ING

April 14, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Forecast: GBP Bounces, Buy vs EUR Below 1.1450 say ING

The Pound to Euro rate has continued to recover on Monday with a rebound to 1.1615 from 16-month lows below 1.1450 recorded last week.

ING Bank analysts expect a strong GBP/EUR exchange rate on any fresh slide to below 1.1450.

Equity markets have recovered ground and US markets are notably more confident with significant gains for bonds and equities.

If risk conditions are more stable, there will be a greater focus on economic fundamentals including UK data releases this week.

Credit Agricole considers that fair value for GBP/EUR is around 1.1925 and commented; “EUR/GBP's fair value increased from 0.8349 to 0.8387 due to a fall in the Eurozone-UK box yield spread, which was partly offset by a fall in the Eurozone-UK short-term rates differential. EUR/GBP is outpacing the rise in its fair value to become more than 1.5 standard deviations overvalued.”

The bank added; “All in all, the EUR remains in overbought territory.”

Goldman Sachs expects a GBP/EUR recovery, but has lowered its 12-month forecast to 1.1630 from 1.2200 previously amid a stronger Euro.


As far as data is concerned, the UK will release the latest labour market and inflation data this week.

According to Scotiabank; “The market tone is risk supportive which should allow participants to focus on data and this week’s employment (Tuesday) and CPI (Wednesday) releases.”

Looking at the labour market data, consensus forecasts are for a slight easing in headline average earnings growth to 5.7% from 5.8% with the unemployment rate holding at 4.4%.

The headline inflation rate is expected to edge lower to 2.7% from 2.8% with the core rate at 3.4% from 3.5%.

Markets are very confident that Bank of England interest rates will be cut at the May policy meeting. Doubts are likely to creep in if there is a significant increase in inflation for the month.

Lower services-sector inflation, however, would be a significant relief

ING commented; “Both pieces of data present downside risks to sterling.”


There are strong expectations that the ECB will cut interest rates by a further 25 basis points this week which would take the deposit rate down to 2.25%.

MUFG noted that the stronger Euro will curb inflation and added; “That alone has the potential to lower the inflation estimate at the end of the forecast profile by between 0.1-0.2ppt leaving the inflation forecasts below the 2.0% target level.”

The bank added; “Prior to Trump’s actions, we assumed the ECB would cut to 2.00% but now we are adding one further rate cut to 1.75% with risks of the ECB having to cut further.”

A cut is priced in, but the central bank rhetoric will be important for Euro sentiment.

According to MUFG; “how Lagarde communicates on the scope for more cuts will be key for rates markets.

Even if tariff concerns remain lower, there will still be unease over wider geo-political developments which will have an important impact on risk conditions and currency markets.

Rabobank commented; “While financial markets will undoubtedly remain focused on tariffs and yields this week, developments in the Middle East may have the potential to blow the price action off course.”

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TAGS: Currency Predictions Pound Euro Forecasts