Pound to Euro Forecast: What to Expect in 2025

The value of the British pound has come under pressure after economists at Goldman Sachs warned that a Bank of England interest rate cut could trigger further declines. Markets had not fully priced in a rate reduction this soon, and a sudden cut could cause weakness against both the euro and the US dollar.

For people sending money abroad — such as overseas property buyers, expats, parents supporting children abroad, or businesses transferring funds — changes in exchange rates matter. A weaker pound means you get less currency for the same amount of money.

This article explains what is driving the pound’s movement, what analysts are predicting for the rest of 2025, and how to protect yourself if you need to make an international transfer.

This guide covers:

• Why Goldman Sachs expects the pound to fall
• How the Bank of England interest rate decision affects exchange rates
• Pound to euro and pound to dollar outlook for 2025
• How fluctuations impact high-value international money transfers
• How to get a better foreign exchange rate by comparing providers

Pound falls as markets brace for a rate cut

Economists at Goldman Sachs have warned that the pound could face “significant downside” if the Bank of England cuts interest rates sooner than expected. The pound has already experienced selling pressure in recent weeks as traders increased bets that UK interest rates may fall before the end of 2025.

Market expectation before the warning:

• Interest rate cut likelihood: low
• Pound relatively stable against euro and dollar

After the warning:

• Higher expectations of a rate cut
• Increased volatility in GBP/EUR and GBP/USD
• Pound saw renewed selling pressure

Goldman Sachs stated that markets are not fully pricing in a cut, meaning a surprise decision would likely push the pound lower.

Why interest rate cuts weaken a currency

When interest rates fall:

• Investments in that currency become less attractive
• International investors seek higher returns elsewhere
• Demand for the currency drops

Lower interest rates = weaker currency.

For people transferring money overseas, timing matters. If you wait and the pound weakens, you receive less foreign currency for the same transfer amount.

Example:

If GBP/EUR drops from €1.16 to €1.14, a £100,000 transfer becomes:

That’s €2,000 less simply because of timing.

How Bank of England policy affects international money transfers

The connection between interest rates and exchange rates is direct.

Higher interest rates → stronger currency
Lower interest rates → weaker currency

Interest rate decisions are a signal to global investors. When rates fall, institutional investors often shift money out of the UK to countries offering better returns. That reduces demand for sterling.

For anyone planning to transfer money internationally — especially large amounts — this means:

• Waiting could be expensive
• Volatility could impact long-term plans (e.g., property purchase abroad)
• Comparing foreign exchange providers becomes more important

compare currency exchange rates now

Pound to euro forecast: what analysts expect for 2025

Analysts expect GBP/EUR to remain sensitive to monetary policy differences between the Bank of England and the European Central Bank (ECB).

Current drivers:

• Bank of England considering rate cuts
• ECB signalling slower cuts due to stickier inflation in the eurozone
• Demand for “safe haven” currencies shifting due to geopolitical uncertainty

If the Bank of England cuts before the ECB, the pound could weaken further against the euro.

Current levels (late Q4 2025):

Economists suggest GBP/EUR could fall to €1.13 if markets respond sharply to a rate cut.

For a business or individual transferring money:

• A fall from €1.16 to €1.13 on £250,000 = €7,500 less received

Small movements can have big financial impact.

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Why pound to euro movements matter for overseas transfers

Movements in GBP/EUR affect:

• Buying property in Spain, Portugal or France
• UK businesses paying suppliers in Europe
• Supporting family abroad
• Relocating overseas for retirement

If the pound weakens, the cost of purchases denominated in euros rises.

Pound to dollar forecast: why GBP/USD is more volatile

GBP/USD is historically more volatile than GBP/EUR.

Reasons:

• US interest rate decisions move global currency markets
• The dollar is a global safe asset, benefiting during uncertainty
• Divergence between Bank of England and Federal Reserve policies

Analysts say GBP/USD could react sharply if:

• The Bank of England cuts before the US Federal Reserve
• Global risk sentiment changes
• Investors shift funds into dollars for safety

Historically:

• Every time the Bank of England cuts unexpectedly, the pound falls against the dollar.

If GBP/USD drops from $1.26 to $1.23, a £100,000 transfer loses $3,000 in value.

Why a weaker pound affects international money transfers immediately

For someone transferring large amounts — such as £100,000, £500,000 or more — timing becomes critical.

When the pound falls:

• You get fewer euros or dollars
• The cost of investments abroad increases
• Fixed international payments (e.g., mortgage abroad) become more expensive

Example:

This is why people transferring money internationally use FX specialists instead of banks — they get better exchange rates and rate hold options.

compare currency exchange rates — avoid losing money if the pound falls.

Why FX specialists can beat bank exchange rates

Banks typically charge:

• Higher exchange rate markup (poorer rates than market rates)
• Transfer fees
• Hidden FX charges inside the rate

Specialist currency brokers offer:

• Better rates (closer to market rate)
• Low or zero transfer fees
• Ability to lock in rates using a forward contract (protecting you if GBP falls)
• Dedicated account managers

How much better can rates be?

A 3–5% difference on a large transfer is significant:

On a £500,000 transfer, you could save £15,000 – £25,000 just by choosing the right provider.

How to protect yourself from pound volatility

Three strategies work well for large international transfers:

1. Rate watch / alerts

You set a target exchange rate, and you’re alerted when the rate hits that level.

2. Forward contract (lock in today’s rate)

You lock today’s exchange rate and transfer later.
Ideal for:

• Overseas property purchases
• Inheritance transfers
• Business invoices payable in the future

3. Compare providers before transferring

Rates vary — even a small difference matters.

To get the best rate, it always pays to compare currency exchange providers.

See how much you could save — compare currency exchange rates today.

What is the current forecast for the pound to dollar exchange rate?

The pound sterling has been under pressure not only against the euro, but also against the US dollar. Analysts tracking GBP/USD expect that the Bank of England and the US Federal Reserve will now move at different speeds on interest rate policy.

Key forces shaping the pound to dollar exchange rate:

• The Federal Reserve (Fed) remains cautious about cutting interest rates because the US still has stronger economic data.
• US Treasury yields remain higher than UK gilt yields, which increases the attractiveness of holding dollars.
• Financial markets anticipate that a December cut from the Bank of England could arrive before the Federal Reserve makes its move.

This difference is known as policy divergence.
If the BoE cuts before the Fed, GBP/USD usually weakens.

Recent analyst projections suggest:

Economists warn that if the Fed delays cuts until early next year, or if the BoE cuts by more “basis points” than expected, the pound could fall more sharply. This matters for anyone needing to transfer funds to the US, buy property, support family members, or send regular transfers.

It’s also important to note that the dollar strengthens when global uncertainty increases — such as:

• Government shutdown fears in the US
• Slowdown in China
• Bank of Japan (BoJ) intervention affecting JPY flows
• Market volatility around central bank press conferences, FOMC minutes, or labour data

If GBP/USD weakens, a large transfer suffers immediately.
£100,000 sent at:

• $1.26 = $126,000
• $1.22 = $122,000

That’s a $4,000 difference just due to timing.

For people moving money to the US, timing and provider choice matter more than ever.

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Where can I find live updates for pound to dollar exchange rates?

Live FX rates fluctuate minute-by-minute because they react to global events, central bank comments and market news. Some of the biggest triggers include:

• Bank of England (BoE) monetary policy updates
• Federal Reserve statements and interest-rate guidance
• Changes in USD rate expectations based on inflation or employment data
• Movements in financial markets such as equity volatility or US treasury yields

Many consumers check exchange rates by Googling “best exchange rates”, but:

• Search engines often show retail tourist rates (not bank transfer rates)
• Banks and online platforms don’t always show the true mid-market rate
• High street banks can build a markup into the rate instead of charging fees

When making large international money transfers — especially over £10,000 — the exchange rate displayed online may not be the rate you actually get.

Instead of checking random online platforms, you can:

1. Submit your transfer details once
2. Get a direct call from a specialist
3. Discuss your currency requirements
4. Lock in a rate when you’re ready

You get personal service, a dedicated contact, and better visibility across the market.

Instead of monitoring currency swings alone, you can have an expert guiding you every step of the way.

See the best exchange rate available now — compare currency exchange today.

FAQs about pound to euro forecast 2025

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