March 5, 2025 – Written by Frank Davies

STORY LINK Pound to Euro Forecast: GBP Slips vs EUR amid Eurozone Economic Optimism

Pound Sterling (EUR) weakened against the Euro (EUR) on Wednesday as the common currency gained strength from positive economic news.

At the time of writing, the Pound Euro (GBP/EUR) exchange rate was trading at around €1.2002, down roughly 0.4%from Wednesday’s opening levels.

On Wednesday, the Euro (EUR) rose against most of its counterparts, supported by news that the anticipated members of Germany’s next coalition have reached a deal on a debt brake.

The Euro also benefited from a weakening US Dollar, due to their inverse relationship.

Furthermore, despite a mixed set of economic data from the Eurozone, including a worse-than-expected services PMI and a better-than-expected PPI release, the single currency maintained its strength.

On Wednesday, the Pound (GBP) remained resilient against most of its major peers after the release of the UK’s latest services PMI.

The finalised index for February remained in expansion territory,(a reading above 50) with a reading of 51, up from 50.8, though slightly below the expected 51.1.

Despite this, Sterling held its strength and even made slight gains against some of its counterparts.

Looking ahead to Thursday, the primary factor influencing the Pound Euro exchange rate will likely be the European Central Bank’s (ECB) upcoming interest rate decision.

The ECB is widely anticipated to cut interest rates by 25 basis points. However, if this rate cut is accompanied by dovish forward guidance, indicating a more cautious stance on future monetary policy, the Euro could
weaken as the trading session progresses.

On the other hand, the Pound may lack a clear direction on Thursday, as there is no scheduled UK economic data to provide guidance. This could lead to Sterling trading in a more rangebound manner, influenced more
by market sentiment and external factors.

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TAGS: Pound Euro Forecasts

March 5, 2025 – Written by Tim Boyer

STORY LINK Best Pound to Dollar Rate of Three Months ($1.28) as US Growth Fears Mount

Pound Sterling (GBP) rallied to a fresh three-month best exchange rate against the US Dollar (USD) on Wednesday as worries over US economic performance continued to weigh on USD sentiment.

At the time of writing, the Pound US Dollar (GBP/USD) exchange rate was trading at around $1.2849, marking a 0.4% increase from the day’s opening levels.

The US Dollar (USD) remained under pressure on Wednesday as mounting fears of a potential recession dented demand for the ‘Greenback’.

Concerns have intensified following the latest wave of tariffs imposed by US President Donald Trump on key trading partners, including Mexico, Canada, and China.

During a speech to Congress, Trump admitted that the US economy could face ‘a little disturbance’ in the short term, but markets fear the consequences could be more severe.

Investor unease was reflected in the bond market, where an inversion of the US Treasury yield curve—a classic signal of an impending recession—further fueled speculation that the US economy may struggle in the months ahead.

This has prompted a shift in expectations for the Federal Reserve’s monetary policy, with traders now betting on multiple rate cuts in 2025, increasing the likelihood of an initial cut as early as May.

The Pound (GBP) capitalized on USD weakness, with additional support coming from improving sentiment across European markets.

Investor confidence was lifted after German coalition talks resulted in an agreement to ease fiscal constraints, paving the way for increased government spending on infrastructure and defence.

The move is expected to inject much-needed stimulus into the Eurozone economy, with potential spillover benefits for the UK, further bolstering Sterling’s appeal.

Looking ahead, the upcoming US jobs report could play a pivotal role in shaping the Pound US Dollar exchange rate in the latter half of the week.

If non-farm payrolls data disappoints again, it may add to concerns over slowing US economic momentum and strengthen the case for an earlier Fed rate cut, accelerating USD losses.

Meanwhile, with little in the way of high-impact UK data, broader market sentiment will likely dictate GBP movement. Should risk appetite remain elevated, the Pound could continue its advance against a struggling US Dollar.

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February 28, 2025 – Written by Tim Boyer

STORY LINK Pound to Euro Forecast: Two-Month Best Now, 1.2350 in Six Months

The Euro has been hampered by a renewed threat on tariffs on EU goods from President Trump with the Pound to Euro (GBP/EUR) exchange rate strengthening to 2-month highs just above the 1.2100 level, but has not made a convincing break higher at this stage.

Danske Bank expects that GBP/EUR will strengthen to 1.2350 on a 6-month view.

Markets are, however, also having to factor in the Ukraine situation. In essence, US trade policies are likely to be a threat to the single currency, but a Ukraine ceasefire would potentially support the Euro.

ING noted that Ukraine’s hopes have helped underpin the Euro but added, “the threat of tariffs looms large and could easily insert a risk premium back into those currencies in the firing line.”

US President Trump has threatened to impose 25% tariffs on US imports from the EU, and an announcement will be coming soon.

ING commented; “Our baseline view is that tariffs will go into place in April.”

Tobin Marcus, head of US policy and politics at Wolfe Research, commented, “The 25% threat that he threw out today is in line with the high end of the range that he previously indicated.”

He added; “It’s a number that’s concerning – certainly should be concerning – for the trans-Atlantic trade relationship, but not totally out of the blue.”

Danske Bank analyst Mohamad Al-Saraf considers that the pound could be a relative outperformer because the trade deficit between the U.S. and Britain is relatively small.

According to Al-Saraf; “If we actually see tariffs being implemented, we expect the pound to outperform in the G10 space. Looking at the price action in the past few months, the pound is relatively immune to all this tariff talk.”

ING considers the potential implications; “The EU is better prepared to tackle Trump 2.0, but it still faces a complex challenge in countering potential US tariffs.”

It added; “While the bloc has several options at its disposal – including retaliatory tariffs on key US exports and the implementation of a digital services tax – the effectiveness of these measures will depend on its ability to act swiftly and cohesively, with a reliance on widespread member state support.”

There will be potentially important implications for monetary policy.

MUFG commented; “The looming threat of tariff hikes on the EU in the coming months continues to pose downside risks to growth in the euro-zone and may encourage the ECB to keep lowering rate at every meeting at least until rates move closer to President Lagarde’s estimated range for the neutral rate between 1.75% and 2.25%.”

Further aggressive rate cuts would tend to undermine the Euro.

MUFG has, however, noted some hawkish comments from ECB officials and added; “The comments suggest to us that it is far from a done deal that the ECB will cut rates both in March and April as currently priced in. It poses one potential upside risk for euro in the near-term although we still expect the policy rate to fall to 2.00% this year.”

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TAGS: Currency Predictions Pound Euro Forecasts

Created on March 05, 2025

• During the trading session on Tuesday, we have seen the British pound break well above the 1.2750 level, which is a very bullish sign.
• Because of this, I think that we will continue to see British pound strength, which was present for several weeks, although it’s been a very noisy scenario.
• We have seen the British pound absolutely dismantle many other currencies, but I’ve been a bit hesitant to get long against the greenback. It is now obvious that we are going to continue to see momentum here.

Technical Analysis

The technical analysis for this GBP/USD pair is very bullish now that we are well above the 200 Day EMA, and therefore I think you need to watch that indicator very closely. As long as we can stay above there, then technically we are in an uptrend. After all, most people are aware that longer-term traders often will use the 200 Day EMA as a trend defining indicator.

To the upside, the 1.30 level above is a potential target, and if we continue to see the US dollar shrank, I think that will very likely be where we end up. Ultimately, if we turn around a break down below the 200 Day EMA, then you could see a situation where the market is little bit confused, and you probably continue to buy British pounds against other currencies such as the Canadian dollar or possibly even the Swiss franc.

In general, this is a market that can be very volatile, so you need to be very cautious with your position sizing, but I think at this point the direction is fairly obvious. As long as inflation numbers in the United States continue to shrink bed, that will have traders out there getting excited on the prospect of the Federal Reserve possibly cutting interest rates. In fact, the market is now pricing in 3 different rate cuts this year, although I think they will be disappointed by that.

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