Barclays Pound To Euro Forecast 2026: GBP/EUR To See 1.1630 By Early 2027 - Forex Factory
Barclays has projected that the GBP/EUR exchange rate will reach 1.1630 by early 2027, driven by factors such as the UK's economic resilience and divergence in monetary policies between the Bank of England and the European Central Bank. This forecast suggests a bullish outlook on the pound relative to the euro, reflecting a potential recovery in the UK's economic performance that may support the currency's appreciation against its European counterpart.
What the desk is arguing
Barclays anticipates a strengthening of the British pound against the euro, with a target of 1.1630 by early 2027. This forecast is underpinned by expectations of a resilient UK economy and a potential divergence in central bank policies which could favor the pound as the Bank of England may adopt a more hawkish stance compared to the ECB.
The desk implicitly rejects scenarios where continued economic headwinds or geopolitical uncertainties could impede the pound’s recovery. This projection seems cautious in light of ongoing inflationary pressures within both the UK and Eurozone, which could impose risks on the expected appreciation of the GBP against the EUR.
Where it sits in our coverage
Currently, our consensus target for GBP/EUR stands at 1.075, with a firm spread ranging from 1.04 to 1.12. This places Barclays' forecast significantly higher than our internal consensus, suggesting a more optimistic view on the performance of the pound relative to the euro than what is reflected in the market.
Specific firm projections include: - **JPMorgan**: Target of 1.10 by Mar-26 - **BNP Paribas**: Target of 1.05 by Mar-26 - **Goldman Sachs**: Target of 1.08 by Dec-26 This mix shows that while Barclays is optimistic, others are more cautious, indicating a divergence in expectations across firms.
How other firms see it
The outlook for GBP/EUR among firms shows varied sentiment. While **JPMorgan** and **Goldman Sachs** express some alignment with an upward trajectory, others like **BofA** present a contrary view, projecting a lower value for GBP/EUR by early 2026, reflecting concerns about the economic environment.
Firms with contrasting views include: - **BofA**: Projecting 1.04, emphasizing risks related to UK economic stability. - **Deutsche Bank**: Stating a target of 1.06, citing similar uncertainties in the Eurozone.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Barclays predicts GBP/EUR to reach 1.1630 by early 2027.
- 02This forecast implies a bullish stance due to the UK's economic resilience.
- 03The outlook diverges markedly from our consensus target of 1.075.
Market implications
If Barclays' forecast plays out, this could lead to significant inflows into GBP-denominated assets as market participants adjust their positions in anticipation of a stronger pound.
Risks to this view
Potential risks include adverse economic developments in the UK or Eurozone, changes in monetary policy that do not favor GBP, and geopolitical tensions that could weigh on investor sentiment.
Sources & References
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