GBP to EUR Forecast & Outlook
In the near term, GBP/EUR is trading close to its recent high near 1.1595, just above its 90-day average of 1.149. The dominant driver is the rate differential, supported by UK yields rising and expectations of slower BoE easing. While the pair trades near its recent highs, the overall bias is towards weakness, as risk-off sentiment and global growth concerns keep the pound under pressure. Current conditions may remain supported by the rate gap but could face downside if risk appetite improves.
Transfer implications
- Expats: sending money to Euro zone countries may find UK pounds buying fewer Euros if the pair declines.
- Travellers: converting GBP to EUR might face less favourable exchange rates if GBP slips from recent highs.
- Businesses: paying Euro invoices could see higher costs if the pair weakens further.
Key drivers
- Rate gap: UK 2-year yields have risen more, narrowing the rate differential with Eurozone assets.
- Risk/commodities: Risk-off sentiment supports safe-haven currencies while pressuring risk-sensitive FX.
- Global factors: Slowdown in Eurozone growth amid geopolitical tensions remains a concern.
What could change it
- Upside risk: UK inflation remains above expectations, supporting the pound further.
- Downside risk: Improved risk sentiment and global growth outlook could lead to GBP weakening.
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