Pound To Euro Forecast – Is Now The Best Time To Buy Euros From Pounds?

GBPEUR Forecast Highlights

• GBPEUR plunged through 1.180 support on US tariffs turmoil
• A recovery rally is underway, but its sustainability is questionable
• Price volatility is expected in the near term

How has the Pound performed against the Euro recently?

The Euro has just gone through an unexpected transformational phase. The market catalyst was Trump’s presidency.

A month into Trump 2.0, the Dollar started to correct. This sell-dollar trade soon gained momentum; and accelerated hugely in the aftermath of the ‘Liberation Day‘. As US and China exchanged tariffs blows, with import tariffs for goods ranging from 125 to 245 per cent, investors fled from riskier currencies.

Amidst the trade chaos, the Euro appears to be a winner. Since late February the EUR-USD rallied 1,000 basis points to trade in the vicinity of 1.155, the highest level since Nov-2021.

Versus Pound Sterling, the rate too gained sharply. Earlier I pointed out the importance of the lateral support at 1.180 in GBPEUR. If broken, the near-term downside risk here would expand immediately.

Indeed. This floor was smashed thoroughly in April. As a result, the rate slumped all the way to 1.145 in a matter of days (see below). Whilst a rebound is underway, the previous floor at 1.180 is now acting as resistance.

What’s in store for the rate now? If the tariff war ratchets down, perhaps GBPEUR may overcome this resistance as investor sentiment start to return to normality. But that’s a big ‘if’. Under Trump, the only certainty we know is uncertainty.

The short-term trading range for GBPEUR is now quite large (compared to its recent past) and I suspect price volatility is here to stay for a while longer. Prices could move 2-300 basis points without disturbing the medium-term trend.

Is it a good time to buy Euros with Pounds?

Based on the above analysis, it is a good time to buy Euros now?

If you need the Euros now, you may want to buy some Euros when the rate is still trading close to 1.180. The sharp rebound off 1.145 means the steep selloff is heavily bought into. But this recovery is by no means guaranteed to last.

Looking beyond summer, however, Sterling holders may wish to wait and see if the rate above return above 1.180. The European Bank could start a large monetary boost to revive the struggling economy – a boost that may weaken the Euro.

You can secure these Euros for use in the future with a currency forward.

Will the pound get stronger against the Euro in the second half of 2025?

What’s next for the Eurozone economy? According to the latest European Central Bank’s economic assessment in late April, two pertinent points are worth repeating:

1. “The disinflation process is well on track.” – This means that inflation is likely to drop in the months ahead. Look at the price of crude oil these days. At multi-year lows (US$58) and still falling. And certain red-hot commodities like Cocoa and Coffee are also dropping in prices. All these will contribute to lower inflation rates in the future.

2. “The outlook for growth has deteriorated owing to rising trade tensions.” With trade barriers rising, companies are unlikely to grow their profits significantly this year. Moreover, consumers will feel the pain if unemployment rates start to rise. Consumer sentiment is already dropping. This means that demand will stay sluggish in the near term.

Due to the above factors, the European Central Bank lowered its policy interest rates last month by another 25bps. This monetary boost aims to create some buffer zones for rise in economic uncertainties.

As European monetary policy eases, the UK is holding out. It is lagging behind in terms of the scale of rate cuts. In March, for example, the Bank of England maintained the policy Base Rate at 4.5 percent with an overwhelming 8-1 vote. Perhaps UK’s inflation rate is insufficiently low (currently at 2.6 percent) for the central bank to slash rates aggressively.

However, all these may change in the future.

The Bank of England is now expected to cut rates in the next meeting in May. This will reduce borrowing costs for many. Meanwhile, UK mortgage costs are starting to decline somewhat (see below).

In conclusion, Trump’s White House is creating unexpected and unpredictable shocks on multiple sectors. For now, GBPEUR has dropped sharply simply because investors favour the Euro for the moment. But will the trend last? Hard to know. The secondary impact of the tariffs has yet to take hold. Already policy rates are tumbling in Europe. GBPEUR may continue to within its recent range at 1.145-1.180 – until new economic disruptions kick the rate into another range.

Source: Bloomberg.com (May 2025, paywall) 

What is the GBPEUR forecast in weeks, months, years? 

While GBPEUR has dropped markedly, the market is actually not that bearish on the rate.

For example, over the next 6 months, GBPEUR is expected to rise above 1.200. Few brokers are expecting a sustained drop below 1.150 (see below).

It would be interesting to see if these forecasts from Exchangerateforecast.org.uk materialised. For now, I would be wary to making market forecasts since there are too many factors that could instantly smash these predictions.

Source: Exchangerates.org.uk (May 2025)