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GBP/EUR now screens undervalued and potentially primed for a relief rebound after the Budget. Position accordingly.
Pound sterling starts today at 1.1334 against the euro, a level that sits well below what many analysts consider fair value based on UK–EU fundamentals.
Year-end consensus forecasts compiled by Pound Sterling Live suggest that although institutional sentiment toward GBP/EUR has softened since mid-year, the pair now screens as undervalued and potentially primed for a relief rebound after the Budget.
? "The Chancellor has an opportunity to deliver fiscal reform, yet we expect her to take a route of political expediency which offers short-term relief," says a strategy note from Citi.
The consensus forecast report draws on projections from more than 30 of the world’s most systemically important investment banks, giving readers a high-probability sense of where the market may trade into year-end. It can be requested here.
Above: GBP/EUR has fallen below fundamental estimates of fair value.
The approach intentionally avoids relying on any single forecaster, which the document notes can be error-prone, and instead aggregates median, mean, and dispersion levels across banks in London, New York, and other major financial centres.
Although individual forecasts differ, the aggregated trends carry weight for anyone planning a high-value transfer.
A clear downward shift since the mid-year survey
Mid-year, the consensus looked firmer for the pound. The earlier survey showed higher median and mean expectations across the key horizons.
? By contrast, the newly released Q4 dataset shows another step down in both central tendency measures, reflecting a steady softening in sentiment toward sterling and a modestly more constructive view on the euro.
The report notes that the upper bound, contributed by the most bullish investment banks, has also fallen again, while the lower bound remains broadly unchanged.
This narrowing at the top suggests that optimism about sterling’s upside potential has faded compared to June.
Even so, the median profile is described as relatively flat, implying that most banks do not see GBP/EUR unravelling materially from here unless the more bearish institutions prove correct.
Weighed by a budget premium
?? ? ?? With the pound to euro spot rate at 1.1334, sterling is trading below where most of the surveyed banks’ central tendencies cluster, even though the report does not disclose those precise values publicly.
This gap between spot and consensus anchors the argument that GBP/EUR is trading too cheaply relative to macro fundamentals.
Analysts argue the pound is weighed down by a risk premium due to the looming budget, leaving it below where fundamentals would typically demand.
This means the fiscal event could provide a catalyst for a tactical sterling rebound into year-end.
? What this means for people with euro payments coming up
The year-end survey is designed specifically to help businesses and private clients rationalise their transfer timing.
The guidance for euro buyers (i.e., sending sterling and receiving euros) acknowledges that, based on the consensus trend, delaying could risk poorer levels if the pound drifts lower.
The report includes worked examples showing how relatively small shifts in GBP/EUR can translate into several thousand euros gained or lost on six-figure transfers.
On the other hand, clients buying pounds with euros receive opposing advice: the survey’s directional bias suggests that waiting could offer better GBP purchase rates if EUR/GBP strengthens further.
Is a relief rally still possible?
Absolutely - and this is where today’s valuation becomes important.
? Despite the consensus downgrade, the pound now sits in an area where even a modest shift in sentiment could generate a rebound, especially if the Budget removes some of the political and fiscal uncertainty that has hung over UK assets.
If markets judge the Budget as credible, the undervaluation highlighted by the consensus gap could provide the foundation for a post-Budget relief move toward the levels where the banks’ median expectations tend to cluster.
Why the full report matters
The uploaded survey contains:
- The full median and mean forecasts across four horizons
- The highest and lowest projections that define the risk envelope
- Comparisons to the mid-year survey
- A performance table showing which banks were most accurate in June
- Tactical guidance for euro buyers and sterling buyers
For anyone planning a £50K-£5M transfer, understanding these directional shifts – without relying on guesswork – can materially improve both timing and risk management.
You can download the full report here.