Pound-to-Euro Forecast Sees Modest Sterling Depreciation Ahead

The Pound-to-Euro exchange rate has been trading above the central bank forecast path despite sterling's strong performance this year, according to a recent survey of major investment banks.

The August poll conducted by Exchange Rates UK Research found that the median forecast for Q3 2026 is around 1.163 in GBP/EUR, and 1.149 in Q4, suggesting modest sterling depreciation rather than another sustained advance.

The consensus among the surveyed institutions expects GBP/EUR to surrender some of its 2026 gains but not collapse, with the central forecast remaining centered around the mid-1.10s. However, individual bank projections vary widely, ranging from 1.0870 by Nomura to 1.1905 by Bank of America.

The survey's findings come after a strong year for the pound, which has rallied approximately 1.85% against the euro so far in 2026, with GBP/EUR currently trading near 1.167. However, recent sterling strength has been tempered by relatively firm UK interest-rate expectations and uncertainty surrounding energy prices.