Pound Sterling to Euro Forecast: "GBPEUR Underperformance Likely"

April 24, 2025 - Written by Frank Davies

STORY LINK Pound Sterling to Euro Forecast: "GBPEUR Underperformance Likely"

The Pound to Euro (GBP/EUR) exchange rate failed to hold 1-week highs at 1.1720 on Thursday and retreated to 1.1670.

GBP/EUR moves have tended to be dominated by risk conditions and equity markets with the Pound advance curbed by weaker equities on Thursday.

The pair is likely to hit further resistance in the 1.1725-1.1730 area

HSBC sees downside GBP/EUR risks on these grounds; “GBP/EUR underperformance likely, as EUR benefits more from structural demand and risk rotation.”

The relative economic outlook between the UK and Euro-Zone will, however, also have an important impact on currency markets, especially over the medium term.

The Euro-Zone data has suggested some resilience while UK reservations have tended to increase, potentially limiting Pound support.

The German IFO business confidence index edged higher to 86.9 for April from 86.7 previously and significantly above consensus forecasts of 85.1.


There was a net improvement in the current conditions index with only a small retreat in the expectations component.

Danske does expect further ECB easing; “the latest update of their wage tracker continues to signal lower wage growth in 2025, further underscoring the case for additional monetary easing from the ECB. Looking ahead, we continue to expect the ECB to deliver 25bp cuts at the upcoming meetings, bringing the deposit rate to 1.50% by September 2025.”

Further easing would tend to limit Euro support.

The CBI industrial orders index improved slightly to -26 from -29 previously with overall output little changed.

CBI Lead Economist Ben Jones commented; “The recent downturn in manufacturing output appears to have eased, but manufacturers still seem gloomy about their prospects amid rising costs, an expected decline in new orders and heighted uncertainty around global economic conditions.”

Danske Bank commented on the UK PMI business confidence data; “Price components ticked higher across the board, with both input and output prices increasing at a faster pace in April, while employment indicators moved further into contractionary territory for both services and manufacturing. Hence the more muted growth outlook and higher price components spells trouble for the BoE.”

Commerzbank's FX analyst Michael Pfister noted that the latest data indicated a wider than expected UK budget deficit with evidence that a weak real economy has undermined revenue.


He is also uneasy over underlying Pound fundamentals; "At this point, you may be wondering why this is relevant to the pound, as developed market currencies tend not to react too strongly to fiscal news. However, the UK's recent growth has been almost entirely based on the public sector. So, not a good sign for the pound: less growth and more rate cuts at the same time."

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