British Pound-to-Euro Forecast: GBP/EUR Slips as UK Autumn Budget Looms

Modified: Tuesday, 27 October 2026 07:31 BST

– Written by


James Fuller

STORY LINK British Pound-to-Euro Forecast: GBP/EUR Slips as UK Autumn Budget Looms

The Pound to Euro (GBP/EUR) exchange rate opened the week on the back foot as uncertainty surrounding Wednesday’s Autumn Budget prompted investors to adopt a cautious approach towards Sterling.

At the time of writing, GBP/EUR was trading at approximately €1.1911, down around 0.2% from Monday’s opening levels.

The Pound (GBP) came under modest pressure as markets turned their attention to Chancellor John Healey’s first Autumn Budget, due on Wednesday.

Although Healey’s recent pledge to give businesses greater ‘breathing space’ has been welcomed, investors remain uncertain about how much support the government can afford to provide.

Higher costs and weaker-than-expected tax receipts have reduced the Chancellor’s fiscal headroom, leaving limited scope for additional spending or tax relief without placing further pressure on the public finances.

The reaction of UK government bond markets will be particularly important.

Gilt yields have already risen sharply in recent months, reflecting concerns about persistent inflation, higher borrowing costs and the government’s ability to meet its fiscal commitments.

Any indication that the Budget will involve substantially higher borrowing could unsettle bond investors and put Sterling under renewed pressure.

Conversely, a credible package that supports economic growth while maintaining fiscal discipline could reassure markets and help the Pound recover.

With the Budget only two days away, however, GBP investors appeared reluctant to take significant positions.

The Euro (EUR), meanwhile, found modest support from an improvement in German business confidence.

Germany’s latest Ifo business climate index climbed from 89.9 in September to 90.2 in October, exceeding expectations for a smaller increase.

The reading marked its highest level since May 2023, offering some encouragement that conditions in the Eurozone’s largest economy may be gradually improving.

Although the increase was relatively modest, it provided a welcome positive signal following a prolonged period of weak German economic activity.

The Euro’s gains remained restrained, however, as concerns surrounding France’s substantial debt burden and political uncertainty continued to weigh on confidence in the single currency.

Near-Term GBP/EUR Forecast: UK Budget and ECB Decision Could Drive Volatility

The Pound to Euro exchange rate could remain relatively subdued during the first half of the week as investors await two major events.

Wednesday’s Autumn Budget will be the immediate focus for Sterling, with Chancellor John Healey expected to outline the government’s tax and spending plans against a challenging fiscal backdrop.

Markets will be watching closely for measures that could affect government borrowing, business investment and the UK’s medium-term growth prospects.

A Budget that maintains fiscal credibility while offering meaningful support to businesses could help Sterling regain ground and challenge the €1.1950 area.

However, proposals that increase borrowing requirements or undermine confidence in the government’s fiscal commitments could trigger renewed selling pressure.

Such an outcome could see GBP/EUR retreat towards €1.1850, particularly if UK gilt yields rise sharply.

For the Euro, attention will turn to Thursday’s European Central Bank (ECB) interest rate decision.

Policymakers are widely expected to leave borrowing costs unchanged, meaning the accompanying statement and comments from ECB President Christine Lagarde could prove more influential than the decision itself.

Investors will be looking for clues about how the central bank intends to respond to persistent inflation, elevated energy prices and the risks surrounding France’s public finances.

A more hawkish message could provide the Euro with support, while any indication that policymakers are increasingly concerned about the region’s growth outlook may limit demand for the single currency.

With both the UK Budget and ECB announcement approaching, GBP/EUR could experience a more pronounced move during the second half of the week.

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TAGS: Pound Euro Forecasts