GBP/EUR Year-End 2025 Forecast
Consensus from major banks.
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The British pound rose against the euro and dollar in the minutes following the release of consensus-beating UK wage data; however, we don’t expect gains to persist.
Average Earnings, including bonus awards, grew 4.7% in the three months to October, said the ONS, a figure which defied consensus expectations for a cooling from 4.8% in September to 4.4%.
The earnings data was therefore unexpectedly strong, and the pound rose in response:
The pound to euro exchange rate rose to 1.1382 in the minutes following the release of the jobs data, having been at 1.1367 ahead of the release.
The pound to dollar exchange rate rose from a low of 1.3355 to 1.3378.
But, the strength ends there: the ONS also said its measure of payrolled employment showed a further fall in those in work of 38K, while the revised estimate of payrolled workers in October 2025 showed a decrease of 22K.
The UK unemployment rate climbed to 5.1%, a five-year high.
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The headlines confirm a deterioration in the jobs market that should push the Bank of England into cutting interest rates again on Thursday.
However, the big takeaway from a financial markets perspective is that rise in wages.
The theory traders are working with is that elevated inflation will prop up demand in the economy, which will keep inflation elevated.
Pound sterling’s rise suggests that the elevated wages will mean the Bank of England will be seriously constrained in its ability to cut interest rates too far in 2026, for risk of stoking inflation further.
