Currency pairs forecast: GBPEUR

Trend bias:‍

Likely biased lower — GBP remains vulnerable relative to EUR still in light of concerns over Autumn Budget

Factors in price action:‍

• Lower than expected CPI numbers added to rate cut bets from the BoE putting pressure on GBP
• The EUR remains supported by the ECB’s cautious tone and lingering inflation concerns, even as eurozone growth slows.

This week (27–31 Oct):‍

• UK: With limited UK macro prints this week, GBP moves may be more sensitive to broad FX flows and external shock.

• Eurozone: On Thursday: ECB rate decision, Q3 preliminary GDP, unemployment, consumer confidence and CPI prints

Key risks ahead:‍

• If eurozone prints disappoint or ECB surprises dovish, GBPEUR could see some bounce.

• Encouraging numbers from the Eurozone and the 2025 lows could be under threat

Trend bias:‍

Still skewed to downside — GBP appears weaker relative to EUR under current dynamics unless GBP surprises.

Factors in price action:

‍• The cross will reflect the interplay between GBP’s inflation surprise (or disappointment) and EUR’s performance in the broader FX space.
• With limited USD-driven moves, cross flows may dominate — especially GBP vs EUR relative strength.
• Any eurozone surprise — positive or negative — could shift the balance.

This week (20-24 Oct):

‍• UK: CPI inflation will be the dominant input for GBP strength or weakness.
• Eurozone / EUR: Flash PMI (Friday) is key for EUR relative performance.
• Other: News flows, risk sentiment, and capital flows will likely accentuate cross moves.

Key risks ahead:

‍• If GBP inflation surprises upward, GBPEUR may see rally attempts (GBP strength).
• If EUR holds up or outperforms (or USD weakens broadly), GBPEUR downside may be limited.
• Again, fiscal surprises or data revisions in the UK could trigger outsized swings in the cross.
• Positioning risk into the flash PMI / CPI data could magnify moves.

Trend bias:‍

Bearish bias remains — GBP underperforming vs EUR given relative political and economic headwinds.

Factors in price action:‍

• Sterling remains under pressure amid weak UK fundamentals and political uncertainty.
• EUR weaker on back of political headwinds but moves minimal versus GBP

This week (13–17 Oct):

UK: The spotlight falls on the labour/employment report for September (jobs, wage growth) — a key input into BOE rate expectations.
EU: CPI data, ECB commentary.

Key risks ahead:

• Strong wage growth or tight labour market data would push back against GBP weakness, possibly triggering a relief bounce toward resistance.
• Weak jobs numbers or indications of labour softening may accelerate downside pressure, with GBPUSD potentially revisiting the August and May low

A soft eurozone CPI could add pressure on EUR

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Trend bias:‍

Found support off the July, August and September lows

Factors in price action:‍

Pound sterling looks set for further downside against the euro in the coming weeks, with the GBP/EUR exchange rate surprising early last week with an impressive rally, which quickly faded and a series of daily losses ensued. This reinforces the optimum tactical approach to GBP/EUR is to 'sell on rallies'.

This week:

• Eurozone: ECB Minutes

Key risks ahead:

• It would need a dovish minutes to see EUR sentiment weaken.

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Trend bias:

August downtrend still intact but support found on the August/July lows

Factors in price action:‍

Market sentiment on the UK remains negative with continued concerns of the UK economy which was illustrated by the worse than expected PMI numbers versus better than expected PMI numbers from Europe.

This week:

• UK: Labour party conference.‍
• Eurozone: EU CPI

Key risks ahead:

• Markets will be listening out for any hints from Chancellor Rachel Reeves of what could be released in the Autumn budget.
• Given markets are firmly pricing in no more rate cuts by the ECB – sharp fall in CPI could spur on rate cut bets and weaken EUR

Trend bias:‍

Downside bias for now in light of concerns of UK economy.

Factors in price action:

• UK’s CPI came in hotter than expectation, tightening BOE rate-cut expectations.
• UK PSNB hit 5 year highs piling pressure on the Chancellor
• Weakness or softness in Eurozone data (PMIs, growth) helps GBP/EUR, but not decisively.

This week:

• UK: PMIs likely move GBP more.
• Eurozone: Flash PMIs, ECB minutes, and sentiment indicators.

Key risks ahead:

• Strong Eurozone surprise or policy clarity from ECB could limit GBP/EUR upside.
• If UK data softens, or risk sentiment worsens, GBP/EUR may drop towards August/July Lows

Trend bias:

Pair finished unchanged last week, continuing its rangebound trend

Factors in price action:‍

French politics has kept pressure on EUR but weak job numbers also putting pressure on USD

This week:

• Eurozone: ECB Interest Rate Meeting
• US: Inflation numbers in the form of PPI and CPI

Key risks ahead:

• No fireworks expected by the ECB and no rate change expected either. Big surprise would be a dovish tone in ECB statement to hint at future rate cuts. A move to the upside could be seen should we see a set of weak inflation numbers stateside to pile further pressure on rate cut bets and pressure USD

Trend bias:

Sideways, consolidating within a tight range

Factors in price action:

• GBP on the backfoot on continued concerns about brewing stagflation in the economy as well as fiscal concerns that could arise in the upcoming Autumn Budget
• EUR weighed on with political risks in France

This week:‍

EU CPI on Tuesday

Key risks ahead:

• Likely to see a bigger reaction on the EUR should the EU CPI numbers undershoot and thus raising the prospect of further rate cuts by the ECB this year – EUR weakness if this is the case

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Trend bias:‍

Range-bound with mild GBP upside after last week’s CPI, but EUR resilience limiting further gains.

Factors in price action:‍

Sterling benefitted from hotter UK inflation, narrowing the perceived policy gap with the ECB. EUR has also found support from softer USD and risk sentiment, leaving cross choppy.

This week:

• Eurozone: Ifo, ECB minutes provide policy tone and French and German CPI

Key risks:

• Weak UK data could reverse post-CPI GBP gains.
• If ECB minutes and CPI numbers has a dovish stance then EUR could soften, lifting the cross.

Trend bias:‍

Rangebound with slight downside risk as sterling momentum softens.

Factors in price action:

‍Sterling has held firm, but momentum is slowing as markets weigh the UK inflation outlook and the BOE’s cautious stance. Eurozone data remains soft, but the euro is finding some support as rate-cut expectations moderate. The pair sits close to support levels, keeping risks skewed to the downside if sterling underperforms.

This week:

• UK: July CPI (Wed), Retail Sales (Fri), Flash PMIs (Thu).
• Euro Area: Flash PMIs (Thu), Q2 negotiated wages (Fri).

Key risks ahead:

• Upside UK inflation surprise could lift sterling.
• Weak UK data or euro stabilization risks breaking below the first level of support.

Trend bias

GBPEUR remains rangebound, but the balance of risks is tilted to the downside for sterling.

Factors in price action:

Last week’s UK GDP beat gave the pound a short-term lift, but the bigger picture still points to a stagnating economy, cautious consumer sentiment, and uncertainty ahead of the autumn budget — all of which could limit upside potential.

On the euro side, positioning remains constructive, with EUR still the preferred vehicle for USD bearish bets. While eurozone data has been mixed, steady ECB guidance is providing a stable backdrop. GBPEUR has bounced around 2% from year-to-date lows following the BoE’s ‘hawkish cut’ and market repricing of UK rate expectations, but fundamental headwinds for GBP remain.

‍This week:

• UK data calendar is light; sterling will take cues from broader risk sentiment.
• Eurozone flash PMIs on Thursday are the key macro driver — softer numbers could weigh on EUR, but the bar for disappointment is relatively high.