GBP Resilience Fades as Medium-Term Outlook Darkens for Sterling

The Pound to Euro exchange rate has remained relatively stable around 1.1675, thanks in part to subdued volatility and calmer gilt markets.

However, investment banks are cautious about the medium-term outlook for Sterling due to fading Bank of England rate-hike expectations, weak UK growth, and renewed fiscal pressures.

MUFG forecasts a decline to 1.1360 by the second quarter of 2026, while Standard Chartered expects a retreat to 1.13 on a 12-month view.