Exchange Rate Calculator

The exchange rate between the British pound (GBP) and the euro (EUR) has experienced notable fluctuations over the past few months, influenced by a combination of economic indicators, monetary policies, and political events in both the United Kingdom and the Eurozone.

Recent Performance of GBP/EUR

As of July 3, 2025, the GBP/EUR exchange rate stands at approximately 1.1751, reflecting a slight decrease from the previous day's close of 1.1791. Over the past week, the rate has oscillated between a high of 1.1885 and a low of 1.1743, indicating a modest downward trend. Year-to-date, the exchange rate has reached a peak of 1.2133 and a trough of 1.1444, underscoring the currency pair's volatility. (poundsterlinglive.com)

Factors Influencing the Exchange Rate

Several key factors have contributed to the recent movements in the GBP/EUR exchange rate:

Monetary Policy Divergence: The Bank of England (BoE) has maintained a cautious stance on interest rate adjustments, with Governor Andrew Bailey hinting at a potential slowdown in the bank's quantitative tightening strategy. This approach aims to alleviate pressure on long-term government bonds, indirectly supporting the pound. In contrast, the European Central Bank (ECB) has implemented interest rate cuts to stimulate the Eurozone economy, which has influenced the euro's performance. (reuters.com)

Political Developments: In the UK, Prime Minister Keir Starmer faced a significant parliamentary rebellion over proposed welfare cuts, leading to a partial reversal of the policy. Despite this political turmoil, the pound remained relatively stable, suggesting that investors are focusing more on economic fundamentals and monetary policies. (reuters.com)

Economic Indicators: The UK's economic data has shown signs of stagnation, with limited growth prospects. Core inflation has remained persistently high, complicating the BoE's decision-making process regarding interest rates. In the Eurozone, economic performance has been mixed, with some member countries experiencing slow growth, which has impacted the euro's strength. (reuters.com)

Historical Context

Historically, the GBP/EUR exchange rate has exhibited significant volatility. The highest recorded rate was €1.752 on May 3, 2000, shortly after the euro's introduction. Conversely, the lowest rate was €1.02 on December 30, 2008, during the global financial crisis. Over the past five years, the average exchange rate has been approximately €1.15, indicating that the current rate is slightly above this average. (keycurrency.co.uk)

Forecasts and Future Outlook

Analysts have provided various forecasts for the GBP/EUR exchange rate:

• Short-Term Forecasts: ExchangeRates.org.uk anticipates that the GBP/EUR exchange rate will reach 1.21 in three months, representing a 1.85% increase from the current rate. (exchangerates.org.uk)

• Medium-Term Forecasts: CoinCodex projects that the GBP/EUR rate will increase by 0.44% over the next six months, reaching €1.194322. However, over the next year, a slight decline of 0.59% is expected, resulting in a rate of €1.182076. (coincodex.com)

• Long-Term Forecasts: EBC Financial Group forecasts a range of €1.16–€1.22 for 2025, with a consensus average of €1.19. For 2026, the range is projected to be €1.14–€1.20, with an average of €1.17. (ebc.com)

Conclusion

The GBP/EUR exchange rate is influenced by a complex interplay of monetary policies, political events, and economic indicators. While short-term forecasts suggest a modest appreciation of the pound against the euro, the medium to long-term outlook remains uncertain, contingent upon future policy decisions and economic developments in both the UK and the Eurozone. Investors and businesses should closely monitor these factors to make informed decisions regarding currency exposure and international transactions.