Exchange Rates UK Research’s latest August 2026 survey of major investment banks suggests the British Pound-to-Euro exchange rate is trading above the central bank forecast path, despite sterling’s strong performance so far this year.
With GBP/EUR currently around 1.1674, the median forecast falls to approximately 1.163 in Q3 2026 and 1.149 in Q4.
The median then stays close to 1.149 through much of 2027, implying modest sterling depreciation rather than another sustained advance.
The latest poll therefore delivers a fairly clear message: the consensus expects GBP/EUR to surrender some of its 2026 gains, but not collapse.
The central forecast remains centred around the mid-1.10s, while individual bank projections range considerably more widely.
Latest Survey Puts GBP/EUR Around 1.15 Through 2027
The Exchange Rates UK Research poll includes 20 institutions for the nearer quarters, giving a relatively broad snapshot of current investment-bank thinking.
The Q3 2026 median remains reasonably close to spot, but the projected path turns softer by year-end. The Q4 median is around 1.149, compared with the current market near 1.167.
That level remains remarkably persistent through 2027.
The bullish side includes Bank of America, which forecasts GBP/EUR at 1.1905 through the first half of 2027 before rising above 1.20 later in the year.
Credit Agricole also expects sterling strength, while UBS sees levels around 1.18.
At the opposite end, ING forecasts 1.1111 by Q2 2027, while SEB also reaches 1.1111. Nomura has a 1.0870 projection further out.
Most forecasts lie between those extremes, however, and the central 50% of the survey remains concentrated around roughly 1.14–1.16 for much of the forecast horizon.
That makes the latest consensus considerably less bullish than GBP/EUR’s recent price performance would suggest.
Pound Sterling Has Rallied Strongly in 2026
The forecast caution comes after a strong year for the pound.
GBP/EUR began 2026 around 1.146 and currently trades near 1.167, leaving sterling approximately 1.85% higher year-to-date.
The pair reached a 2026 high around 1.183 during July before giving back part of the advance.
July itself delivered another 0.72% gain after increases of 0.55% in June and 1.36% in April. August has started more quietly, with GBP/EUR slipping around 0.1% during the opening sessions.
Recent sterling strength has been supported by relatively firm UK interest-rate expectations.
The Bank of England maintained Bank Rate at 3.75% at its latest meeting, although the MPC split 6-3 and remains concerned about the inflationary risks posed by volatile energy prices.
UK inflation nevertheless fell faster than expected to 2.6% in June.
Against the euro, however, the relative policy story is becoming less straightforward.
The ECB kept rates unchanged in July after previously tightening policy, while euro-area inflation stood at 2.9% in July.
Policymakers continue to stress uncertainty surrounding energy prices and the potential for the Middle East shock to feed into broader inflation.
Reuters also noted this week that sterling was struggling for direction against the euro as markets weighed possible de-escalation around the Strait of Hormuz.
ING argued that investors may be pricing too much Bank of England hawkishness, which could leave the pound vulnerable against the single currency.
Pound-to-Euro Outlook: Strong Spot Rate, Softer Consensus
The contrast between the current market and the forecast distribution is the most interesting finding in the August survey.
GBP/EUR has spent much of 2026 trending higher and remains above both its 20-day and 50-day moving averages on the supplied year-to-date chart.
Yet the median bank projection does not extrapolate that trend.
Instead, most institutions expect sterling to lose some ground and settle around 1.15 through 2027.
For anyone buying euros, that distinction matters. A decline from 1.167 to 1.149 would reduce the euro proceeds from every £100,000 exchanged by roughly €1,800 before provider spreads and fees.
The survey does not rule out further sterling gains: Bank of America, UBS and Credit Agricole provide credible bullish scenarios.
But the balance of institutional forecasts suggests today’s Pound-to-Euro exchange rate is towards the stronger end of where banks expect the pair to trade over the coming quarters.
The August consensus therefore favours gradual mean reversion towards 1.15 rather than a continuation towards 1.20.
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