Exchange Rates UK Research’s latest September 2026 survey of major investment banks suggests the Pound-to-Euro exchange rate will struggle to extend its 2026 gains, with the median forecast pointing to GBP/EUR around 1.1494 by Q2 2027.
With GBP/EUR currently near 1.1627, that represents a decline of approximately 1.1%.
The median forecast is broadly flat near 1.1628 for Q3 2026 before falling to 1.1494 for Q4, remaining close to that level through the first half of next year.
The range of institutional forecasts is considerably wider.
For Q2 2027, projections stretch from approximately 1.1236 to 1.1905, while the central 50% of forecasts sits around 1.1445–1.1628.
Latest Bank Survey Points to GBP/EUR Around 1.15
The latest Exchange Rates UK Research survey suggests investment banks are generally reluctant to extrapolate sterling’s gains over the past year.
The median forecast is 1.1628 for Q3 2026, effectively unchanged from current levels, before falling to 1.1494 for Q4 2026.
That 1.1494 level remains the median for Q1 and Q2 2027 and again appears around the centre of forecasts further into next year.
There is nevertheless a substantial disagreement between individual institutions.
At the bullish end for sterling, Bank of America forecasts GBP/EUR at 1.1905 through the first half of 2027, before moving above 1.20 later in the year. UBS also expects 1.18, while Credit Agricole sees 1.1765 by Q2 and 1.1905 thereafter.
The more bearish forecasts are markedly different.
ING sees GBP/EUR falling to 1.1236 by Q2 2027 and 1.1111 later in the year. SEB forecasts 1.1494 for Q2, while Natixis sees 1.1364.
MUFG is also below spot with a 1.1429 Q2 forecast.
The central message from the poll is therefore not for a dramatic sterling decline. Rather, the median suggests GBP/EUR settles around 1.15 after spending much of 2026 above that level.
Pound Holds 2026 Gains, But Momentum Has Faded
Pound Sterling enters the final quarter of 2026 from a relatively strong position against the euro.
GBP/EUR started the year around 1.1462 and currently trades near 1.1627, leaving the pound approximately 1.4% higher in 2026.
The gains have not been straightforward. GBP/EUR fell below 1.14 during February before staging a strong recovery and reaching a 2026 high around 1.1827 in July.
Since then, momentum has faded.
GBP/EUR declined 0.21% in August and is down another 0.30% so far in September. The pair has slipped from around 1.169 at the start of the month to 1.163, with recent sessions producing a sequence of relatively modest declines.
The changing interest-rate picture helps explain why banks are cautious about projecting another sustained sterling advance.
The Bank of England voted 6-3 to leave Bank Rate at 3.75% in September, with three policymakers favouring an immediate increase to 4.0%. UK inflation rose to 3.1% in August and the Bank said risks to the inflation outlook were tilted further to the upside, largely because of elevated energy prices.
The European Central Bank, meanwhile, raised its key rates by 25 basis points in September, taking the deposit rate to 2.50%, as policymakers responded to persistent inflation pressures associated with the Middle East conflict.
Pound Sterling has also lost some momentum as expectations for UK rate increases have been reassessed. Recent hopes that Iran could reopen the Strait of Hormuz pushed oil prices lower, potentially reducing the pressure on the Bank of England to tighten aggressively.
GBP/EUR Outlook: 1.15 Consensus, But Risks Extend from 1.12 to 1.19
The latest Exchange Rates UK Research poll presents a relatively subdued central outlook for the Pound-to-Euro exchange rate.
At 1.1627, GBP/EUR is already almost exactly in line with the Q3 median.
The median then falls to 1.1494 by the end of 2026 and remains there through Q2 2027, implying approximately 1.1% downside from current levels.
That would still leave sterling considerably above some of the weaker levels recorded earlier in the year and suggests banks expect consolidation rather than a major reversal.
The more interesting feature is the disagreement surrounding that central forecast.
By Q2 2027, the full bank range extends from roughly 1.1236 to 1.1905.
The upper end would take GBP/EUR back towards levels not seen this year, while the lower end would represent a substantial reversal of sterling’s 2026 appreciation.
For euro buyers, the consensus therefore suggests today’s exchange rate is slightly better than the level major banks collectively expect next year.
For now, 1.15 has emerged as the central institutional forecast for GBP/EUR into the first half of 2027, but the unusually broad range shows that the relative paths of Bank of England and ECB policy remain capable of producing a substantially different outcome.
