Pound Holds Firm Against Euro Amid Subdued Volatility

The Pound to Euro exchange rate has held steady around 1.1700 due to extremely subdued currency volatility, which is favouring Sterling's attractive carry profile.

Lloyds Bank sees potential for the Pound to strengthen to 1.1925 on technical grounds, while MUFG has closed its short GBP/EUR position but remains cautious, targeting 1.1360 by the second quarter of 2027.

The recent data shows that UK GDP growth was broadly in line with expectations at 0.4% for the second quarter of 2026, following 0.6% growth in the first three months of the year.