Pound Sterling to Euro Forecast: FTSE Winning Streak Boosts GBP Rates

April 29, 2025 - Written by David Woodsmith

STORY LINK Pound Sterling to Euro Forecast: FTSE Winning Streak Boosts GBP Rates

The Pound to Euro rate has strengthened to 3-week highs above 1.1750 in European trading on Monday.

UK equity markets have made further headway with the FTSE 100 index aiming to post the 11th successive daily gain amid the on-going recovery from April lows which has helped underpin the Pound.

The rebound in equities has been a key element in driving the GBP/EUR recovery from 14-month lows below 1.1450 recorded at the height of the market panic.

The Euro could be protected by hopes for progress in ending the Russia-Ukraine war with Russia announcing a 3-day cease-fire from May 8th.

On a medium-term view, Bank of America expects GBP/EUR to strengthen to 1.2200 at the end of 2025.

The CBI retail survey improved to -8 for April from -41 previously and compared with consensus forecasts of -21, but this was the 7th successive decline.

Retailers were also broadly pessimistic surrounding the outlook with an expected reading of -33 for May.


CBI Principal Economist Martin Sartorius commented; “Annual retail sales volumes fell more slowly in April, but firms remain pessimistic about the outlook due to the impact of Autumn Budget measures, persistently weak consumer sentiment, and global economic uncertainty.”

He added; “These themes were echoed in the wholesale sector, which reported one of the sharpest sales declines in the past four years.”

Confidence in the overall UK growth outlook remains fragile, especially given trade tensions.

The EY Item Club is now forecasting that UK GDP growth of 0.8% from 1.0% previously.

Importantly, it has also cut the 2026 forecast to 0.9% from 1.6% due to the longer-term negative trade impact from US tariffs.

Weaker growth will also have a negative impact on the fiscal situation.

Barclays expects the overall tariffs outlook will hurt the Euro more; "The UK's greater resilience to direct tariffs than the eurozone implies smaller demand damage, thereby offsetting the drag from a more-limited fiscal space.”


Bank of America (BoA) is still positive on the Pound outlook; “GBP has tracked broader FX patterns and a broader market correction will also benefit GBP.”

ING also noted barriers to Euro gains; “The mood music coming from the European Central Bank (ECB) sounds pretty dovish, with some even happy to speculate over 50bp of rate cuts. Concerns over inflation seem to have largely evaporated, and tomorrow's release of the ECB survey on one and three-year inflation expectations may help.

The Euro will tend to gain support if there is capital flight from the US.

ING put the risk into perspective; “the euro does stand to be a major beneficiary from the flight from dollars, but there is still little evidence of foreign reserve managers leaving US Treasuries.

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TAGS: Pound Euro Forecasts