UK Growth Concerns Limit GBP Upside

GBP/EUR year-ahead forecast: Median, range and upside/downside risks based on projections from 20+ investment banks and FX analysts.View forecasts

The Pound to Euro (GBP/EUR) exchange rate held steady on Saturday as Sterling reacted to the latest UK growth data and markets shifted focus to incoming Eurozone figures and US inflation prints.

DAILY RECAP:

GBP/EUR traded in a narrow band around 1.15 on Saturday after modest gains on Friday, reflecting market caution in the absence of new UK data.

The UK economy expanded by just 0.1% in the final quarter of 2025, undershooting forecasts and reinforcing expectations that the Bank of England will lean toward monetary easing later this year.

This weaker-than-expected growth print, coupled with subdued business investment and stagnant services output, weighed on Sterling sentiment and helped sustain rate-cut pricing in UK markets.

Against this backdrop, the euro maintained a relatively firm footing as attention pivoted to preliminary Eurozone GDP data, which is expected to show steady 0.3% quarterly expansion.

Eurozone economic resilience has tempered concerns about a downturn, and ECB policymakers have signalled a readiness to keep policy steady, underpinning the single currency’s appeal against the Pound.

FX market positioning also reflected a broader risk-off tone as investors balanced central bank expectations with geopolitical uncertainties and upcoming macro releases.

Near-Term GBP/EUR Forecast: Data and Central Banks in Focus

Looking ahead, GBP/EUR is likely to be driven by incoming macroeconomic releases and central bank commentary.

The forthcoming Eurozone GDP confirmation and inflation data could reinforce the ECB’s policy outlook, potentially supporting the euro if figures surprise on the upside.

On the UK front, any signs of stronger-than-expected domestic demand or wage growth could temper rate-cut expectations and lend support to Sterling.

Beyond Europe, US consumer price index readings and Fed commentary will also influence broader market sentiment and risk appetite, potentially spilling over into cross-currency flows.

With a relatively sparse UK economic calendar next week, monetary policy expectations, yield differentials and global sentiment will be the primary influences on GBP/EUR near term.