Pound Sterling to Euro Forecast: Dollar Slide Could Enable Strong GBP Gains

April 25, 2025 - Written by David Woodsmith

STORY LINK Pound Sterling to Euro Forecast: Dollar Slide Could Enable Strong GBP Gains

The Pound to Euro exchange rate hit a 2-week peak just above the key level of 1.1730 on Friday before settling around 1.1725 with a firm underlying tone.

Equity markets again helped underpin the Pound Sterling on the day. The FTSE 100 has already risen for the last nine trading sessions as trade war tensions have cooled, the longest run since December 2019.

According to ING; “EUR/GBP breaking under 0.8520/25 could lead to a much deeper correction.” (Strong GBP/EUR gains if it can sustain a move above 1.1730.)

Credit Agricole added; “we note that our estimates of short-term fair value that are based on FX drivers like relative rate spreads and risk aversion suggest that the GBP is looking quite undervalued vs the EUR.”

It added; “An important question for FX investors is whether the upcoming UK data releases and global developments next week and the outcome of the BoE policy meeting on 8 May could trigger a reversal of recent market trends.”

Scotiabank, however, sees GBP/EUR at 1.1630 at the end of the second quarter.

MUFG expects a focus on inflation; “Given the labour market and the recent strength of the economy, along with a minimum wage increase, inflation risks remain much higher in the UK.”


If the Bank of England remains cautious over rate cuts and risk appetite is less hostile, the Pound could benefit.

UK data was mixed on Friday with stronger than expected retail sales data offset by a further dip in consumer confidence

Retail sales volumes increased 0.4% for March compared with consensus forecasts of a 0.3% decline, although the February increase was revised to 0.7% from the original reading of 1.0%.

Favourable weather boosted demand for clothing and outdoor sales which was offset partly by a decline in supermarket sales.

First-quarter sales increased 1.6% from the fourth quarter of 2024, the strongest increase since July 2021.

According to SocGen chief FX strategist Kit Juckes; "Sterling has got a little bit of comfort from this. I wouldn't overstate it, but it had a decent run and was threatening to fall back and got a little bit of help from the data, temporarily at least."

There were still doubts whether spending would be sustained.


The GfK consumer confidence index declined to -23 for April from -19 previously, slightly worse than expectations of -21 and the lowest reading since November 2023 with all components declining on the month.

Neil Bellamy, Consumer Insights Director at GfK, an NIQ Company, commented; “Consumers have not only been grappling with multiple April cost increases in the form of utilities, council tax, stamp duty, and road tax, but they are also hearing dire warnings of renewed high inflation on the back of the Trump Tariffs.”

He added; “Are we now on the verge of another round of rapidly increasing prices? If so, consumer confidence is likely to collapse and the broad gains seen since the disastrous September 2022 minibudget, when confidence hit a record low of -49, could quickly be eroded.”

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TAGS: Currency Predictions Pound Euro Forecasts