**Pound to Euro: Week Ahead Forecast Highlights GBP Prospects**
*Source: Adapted and expanded upon from [Pound to Euro: Week Ahead Forecast – GBP Rally Could Run Further](https://www.forexfactory.com/news/1354590-pound-to-euro-week-ahead-forecast-gbp-rally) by James Skinner, Forex Factory, with additional analysis from industry sources such as Reuters, Bloomberg, and financial market commentaries.*
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## Overview: Pound-Euro Momentum Carries Into New Week
The British pound (GBP) ended the previous week on a stronger note against the euro (EUR), reflecting a rally that saw renewed energy after a period of consolidation. Market watchers are now focused on whether this trend has further to run in the days ahead, as both currencies contend with changing economic indicators and recalibrated central bank expectations. Against this backdrop, understanding the factors behind the sterling’s upturn and the likely trajectory for the GBP/EUR pair is critical for traders and businesses alike.
This in-depth analysis provides a comprehensive outlook on the pound-to-euro exchange rate in the coming week, covering the main drivers, risks, and expectations influencing the currency pair.
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## GBP/EUR Performance Recap: Recent Developments
– **Late-week surge:** GBP/EUR rallied higher at the close of last week, rising above the 1.17 mark, which had previously been a significant resistance level.
– **Context:** This movement reversed earlier softness in sterling, which had stemmed from shifting interest rate forecasts and mixed UK data releases.
– **Weekly close:** The pair finished the week on a positive note, setting the stage for potential follow-through in the near term.
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## Key Drivers Supporting GBP Strength
Market participants have pinpointed several underlying catalysts guiding the GBP/EUR pair. These include both UK-specific economic stories and broader European dynamics.
### 1. UK Economic Resilience
– **Data surprises:** Recent UK data, including core inflation and wage growth figures, demonstrated underlying resilience in the economy, even as headline inflation continued to fall.
– **Services sector:** The UK services sector, a major contributor to overall GDP, has shown stability. The S&P Global/CIPS Purchasing Managers’ Index (PMI) for services remained in expansion territory, suggesting continued business activity.
– **Consumer spending:** Retail sales have outperformed expectations, reinforcing the notion that households are adapting to elevated price levels.
– **Labor market:** While cooling from previous highs, wage pressures remain, offering some support to the Bank of England’s cautious outlook.
### 2. Bank of England Policy Outlook
– **Interest rates:** The Bank of England (BoE) has maintained a careful tone, signaling that a first rate cut might come later than previously anticipated. This “higher for longer” stance favors currency strength.
– **Inflation concerns:** While headline inflation is declining towards target, the BoE has expressed uncertainty about the persistence of domestic price and wage pressures.
– **Market
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