Pound-to-Euro Forecast Slashed at Goldman Sachs - Pound Sterling Live

What the desk is arguing

Goldman Sachs has slashed its forecast for the Pound-to-Euro exchange rate, highlighting increasing uncertainties within the UK economic landscape. The bank's revised outlook suggests a more challenging environment for the pound, influenced by factors including inflationary pressures and potential shifts in Bank of England policy.

Supporting this thesis, Goldman cites recent economic data that indicates weaker-than-expected growth prospects for the UK, adding to an increasingly cautious stance among investors. The desk implicitly rejects the notion that the pound will experience substantial recovery against the euro in the near term, considering the current economic headwinds.

Where it sits in our coverage

Our consensus target for the Pound-to-Euro exchange rate currently stands at 1.075, with a firm spread reflecting moderate volatility expectations. The outlook from Goldman diverges from our consensus, which remains more optimistic than Goldman’s latest forecast, indicating a potential mismatch in market sentiments.

Specific firms have also weighed in on their Pound-to-Euro targets, presenting a mixed bag of views: - Barclays: 1.08 (Dec-26) - JPMorgan: 1.10 (Dec-26) - BNP Paribas: 1.07 (Dec-26)

How other firms see it

In contrast, some firms hold a more positive outlook on the Pound-to-Euro pairing, which suggests a divergence from Goldman’s recent cut. Notably, JPMorgan offers a target that reflects a belief in relative strength for the pound against the euro.

• Allegro: Stance is notably optimistic towards the pound.
• BofA: Maintains a cautious view aligned with Goldman’s latest revisions.

This variety of perspectives underlines the complexities of the current FX landscape, as varying economic indicators and geopolitical factors continue to influence trader sentiment towards the pound.