A month ago the story was that the European Central Bank had turned hawkish and the euro would firm as the rate gap with the UK narrowed. That thesis has been overtaken by the data, and I would rather say so plainly than quietly leave an old forecast up. Eurozone inflation has collapsed back toward target, the ECB’s hiking case has evaporated, and the euro is at its weakest against the pound in a year. You can request a quote to talk it through with a specialist.
Where the euro stands right now
As at 13 July 2026:
| Measure | Level | Context |
|---|---|---|
| GBP/EUR | ~1.1738 | A one-year high for sterling — well above the 1.14–1.16 band the euro held all spring |
| EUR/USD | ~1.1408 | Rangebound; capped by the dollar rather than driven by the euro |
| Eurozone inflation | 2.8% (June) | Down from 3.2% in May — the key change |
| ECB deposit rate | 2.25% | Raised 11 June; markets price an 88% chance of a hold on 23 July |
| Bank of England Bank Rate | 3.75% | Held 18 June (7–2); expected to hold again on 30 July |
The ECB hiked into an energy shock that has already faded
This is the part that matters, and most commentary has not caught up with it.
On 11 June the ECB raised its deposit rate to 2.25% — its first increase in three years — because eurozone inflation had climbed to 3.2%, driven by the energy shock from the Iran conflict. It was a defensible decision on the data available at the time.
Three weeks later, June inflation came in at 2.8%. The energy spike is unwinding almost as quickly as it arrived — Brent has fallen from above $110 in April to the low-$90s, and US petrol prices dropped nearly 10% in June after the Strait of Hormuz reopened. The inflation the ECB was tightening against is receding on its own.
The market has drawn the obvious conclusion. Pricing now implies an 88% probability that the ECB simply holds at 2.25% on 23 July. The September hike that looked like a coin-flip a month ago now looks unlikely on current data. The June hike is starting to look like a one-and-done.
“The ECB tightened into an energy shock that was already fading. That is not a criticism — they act on the data in front of them — but it does mean the hawkish euro trade had a very short shelf life. Anyone who bought euros in June expecting the rate gap to keep narrowing has been on the wrong side of it,” — Anthony Bull, CEO, Cambridge Currencies.
The next ECB interest rate decision is Thursday 23 July 2026.
Why the pound is at a one-year high against the euro
GBP/EUR at 1.1738 is a genuine break from the 1.14–1.16 corridor that held for the first half of the year. Two things drove it, and they compounded.
The rate gap stopped narrowing. The Bank of England is at 3.75%; the ECB is at 2.25%. That 150 basis-point gap was expected to close as the ECB kept hiking. With eurozone inflation back at 2.8% and the ECB likely on hold, it is now expected to stay at 150bp — and the UK’s own inflation problem (services at 3.7%) means the Bank is in no hurry to cut either. Sterling keeps its yield advantage.
UK political risk resolved. Sir Keir Starmer announced his resignation on 22 June. Rather than the drawn-out contest markets feared, Andy Burnham has secured the backing of more than 80% of the Parliamentary Labour Party and is expected to be confirmed as leader on 17 July, taking office shortly after. An orderly succession removed a tail risk that had been discounting the pound.
The result is a pound supported from both sides, against a euro that has lost its hawkish story.
My euro forecast for the next six months
| Pair | Q3 (to end Sept) | Q4 (to end Dec) |
|---|---|---|
| EUR/USD | 1.12–1.18 | 1.13–1.20 |
| GBP/EUR | 1.15–1.19 | 1.14–1.19 |
These are Cambridge Currencies’ ranges as at 13 July 2026, based on current market pricing. They are not guarantees and rates may move either way. This page is reviewed every four to eight weeks and around each ECB decision.
Against the dollar, the euro is not really the actor. EUR/USD near 1.1408 is being set by the Federal Reserve, not the ECB — and the Fed has just had its own shock, with June payrolls at 57,000 cutting US hike expectations. A weaker dollar could lift EUR/USD toward 1.18 even with the ECB on hold. The euro may rise against the dollar for reasons that have nothing to do with the euro. See my USD forecast 2026.
Against the pound, the euro’s path is harder. For GBP/EUR to fall back toward 1.15 and below, you would need either the ECB to resume hiking — which needs eurozone inflation to turn back up — or the Bank of England to start cutting, which services inflation at 3.7% currently argues against. Neither looks imminent. I expect GBP/EUR to hold the higher ground it has taken.
The honest caveat: I was expecting the opposite a month ago, and said so. Currency forecasts made on one month’s data do not survive the next month’s data. That is precisely the argument for not leaving a large exposure to the market’s mercy.
What this means if you are transferring euros
If you are buying euros — funding a property purchase in Spain, France, Portugal or Italy, or paying a eurozone supplier — this is the best level for a sterling buyer in a year. On a €400,000 property, GBP/EUR at 1.1738 costs about £340,774. At 1.1535, where it sat a month ago, the same purchase cost about £346,771. That is roughly £6,000 saved, purely on where the rate has moved.
If you are selling euros — bringing proceeds from a eurozone property sale or business back to sterling — the move has gone against you by the same arithmetic. €300,000 at 1.1738 yields about £255,580; at 1.1535 it would have yielded about £260,078. Roughly £4,500 of erosion in four weeks.
For anyone buying property in the eurozone, this is where timing bites. A 5% move on a €500,000 purchase is roughly £22,000 — far more than the difference between any two brokers’ rates. In our experience working with buyers in Spain, France and Italy, the risk that actually costs people is an unhedged exposure left open across a central-bank meeting, not a fraction of a cent on the spread.
Strategy: three central-bank decisions in eight days
The ECB on 23 July, the Federal Reserve on 29 July and the Bank of England on 30 July land inside a single week. Intraday moves of 1–2% around any one of them are not unusual. If you have a euro payment falling due in that window, that is a lot of variance to leave open.
- Forward contract — fixes today’s rate for a payment up to twelve months ahead, typically for a deposit of 5–10%. The straightforward answer if you have a completion date and cannot absorb a swing.
- Rate alert — set a target level and be notified if the market reaches it. Useful if you have time and no fixed deadline.
- Splitting the transfer — converting in tranches averages your rate across the noise rather than betting the whole amount on one day.
The most expensive mistake we see is not picking the wrong moment — it is leaving a large exposure open across a central-bank decision hoping for a slightly better rate. See more on whether now is a good time to exchange money.
Frequently asked questions
Is the euro going up or down in 2026?
The euro has weakened against the pound and is rangebound against the dollar. Eurozone inflation fell to 2.8% in June from 3.2% in May, undercutting the case for further ECB rate hikes. GBP/EUR has risen to around 1.1738, a one-year high for sterling. Our forecast is EUR/USD at 1.12–1.18 and GBP/EUR at 1.15–1.19 through Q3 2026.
Will the ECB raise rates on 23 July 2026?
Market pricing implies an 88% probability that the ECB holds its deposit rate at 2.25% on 23 July. Eurozone inflation fell to 2.8% in June, back near the ECB’s 2% target, which removes much of the pressure to tighten further after the 11 June hike.
Why is the pound so strong against the euro?
Two reasons. The Bank of England’s 3.75% Bank Rate remains 150 basis points above the ECB’s 2.25%, and with eurozone inflation falling that gap is no longer expected to narrow. Separately, UK political uncertainty has resolved: Andy Burnham is set to be confirmed as Labour leader on 17 July with over 80% of the parliamentary party behind him, removing a risk premium from sterling.
What is the euro to dollar forecast for 2026?
EUR/USD is forecast in a 1.12–1.18 range through Q3 2026 and 1.13–1.20 in Q4. It trades near 1.1408. The pair is currently driven more by the dollar than the euro — a softening US labour market may lift EUR/USD even with the ECB on hold.
Is now a good time to buy euros?
GBP/EUR near 1.1738 is the best level for sterling buyers of euros in a year. On a €400,000 purchase that is roughly £6,000 cheaper than a month ago. Whether it improves further depends on the ECB on 23 July and the Bank of England on 30 July. This is general guidance, not a personal recommendation.
Will the euro get stronger against the pound?
It would need one of two things: the ECB to resume raising rates, which requires eurozone inflation to turn back up from 2.8%, or the Bank of England to begin cutting, which UK services inflation at 3.7% currently argues against. Neither looks imminent, so GBP/EUR may hold the higher ground it has taken.
Should I buy euros before the 23 July ECB decision?
Markets price expected decisions in advance, and three central-bank meetings fall within eight days — the ECB on 23 July, the Fed on 29 July and the Bank of England on 30 July. If you have a fixed deadline such as a property completion, a forward contract fixes today’s rate and removes the need to time any of them. If you have time and no deadline, a rate alert lets you target a better level.
Speak to a Cambridge Currencies specialist about timing your euro transfer. Whether you are completing a property purchase in Spain, France or Italy, or paying eurozone suppliers, request a free quote and we’ll talk it through. Every transfer is handled by phone with a dedicated specialist — a dealer, not an app — who watches the market on your behalf around scheduled ECB and BoE decisions. You can follow every meeting in our weekly currency forecast.
Related guides: EUR/USD forecast · Pound to euro forecast · USD forecast 2026 · Next Bank of England decision · What is a forward contract?
