Euro forecast 2026: EUR/USD is trading at 1.1733 and GBP/EUR at 1.158 on 12 May 2026. The euro is forecast to trade in a 1.15–1.20 range against the dollar and 0.85–0.88 against the pound over the next six months, with the 11 June ECB rate decision now the dominant near-term driver as markets price an 86% probability of a rate hike. Check the live EUR to USD rate or EUR to GBP rate for real-time prices.
Snapshot: Key Euro Rates (12 May 2026)
| Pair / Rate | Current | 2026 High | 2026 Low |
|---|---|---|---|
| EUR/USD | 1.1733 | 1.2019 (27 Jan) | 1.1435 (15 Mar) |
| EUR/GBP | ~0.8637 (GBP/EUR ≈ 1.158) | 0.8770 (1 Mar) | 0.8624 (19 Mar) |
| ECB Deposit Rate | 2.00% | Next decision: 11 June 2026 | |
| Brent Crude | ~$105/barrel | Iran-US tensions keeping oil bid | |
| Eurozone CPI (April) | 3.0% | Core CPI: 2.2% | |
Rates are indicative mid-market levels and update throughout the trading day. For a dealing rate on your specific transfer, request a free quote.
What is driving the euro in May 2026?
1. The ECB pivot — from hold to potential hike
The European Central Bank held its deposit rate at 2.00% on 30 April, leaving the rate unchanged since the last ECB cut in June 2025. The decision was unanimous, but Lagarde confirmed both a pause and a possible hike were on the table. The statement explicitly noted that “upside risks to inflation and downside risks to growth have intensified”.
Markets have responded sharply. As of 12 May, money markets price an 86% probability of a 25bp hike at the 11 June meeting, taking the deposit rate to 2.25%, with three hikes priced into year-end. That is a striking shift from late March, when consensus expected the ECB to remain on hold through Q3.
Anthony Bull, CEO of Cambridge Currencies, says: “The market has done a complete 180 on the ECB in six weeks. Anyone with a euro payment scheduled between now and 11 June is carrying real event risk in both directions. A hawkish hike could push EUR/USD towards 1.19 within hours. A surprise hold could pull it back to 1.16.”
2. Eurozone inflation and the energy shock
Eurozone headline inflation jumped to 3.0% in April from 2.6% in March, driven almost entirely by energy. Core inflation, which strips out energy and food, held at 2.2%. Q1 GDP grew 0.8% year-on-year.
The IMF cut its 2026 eurozone growth forecast to 1.1% in its April World Economic Outlook, down from 1.4%. Germany continues to underperform — the May ZEW indicator of economic sentiment came in at -10.2, an improvement of seven points from April but still firmly in negative territory.
3. Geopolitics — Iran tensions, oil and Trump tariffs
Brent crude has held above $105 a barrel after President Trump rejected Iran’s latest peace proposal on 12 May. Persistent oil prices at this level keep the energy-driven inflation impulse alive and reinforce hawkish ECB pricing.
A second risk has now emerged: Trump has threatened “much higher” tariffs on EU goods unless the bloc eliminates its own tariffs on US products by 4 July. A breakdown in EU-US trade talks would be euro-negative. A resolution would likely lift EUR/USD towards the top of its range.
EUR/USD forecast 2026: euro to dollar outlook
EUR/USD has recovered from its 15 March low of 1.1435 to trade around 1.1733 today, supported by dollar weakness and the prospect of an ECB hike before any further Fed easing. The 2026 high was 1.2019 on 27 January.
| Scenario | EUR/USD Range | Trigger |
|---|---|---|
| Bullish euro | 1.20 – 1.22 | ECB hikes 11 June, Iran de-escalation, Fed signals H2 cuts |
| Base case | 1.15 – 1.19 | ECB delivers one or two hikes, range-bound dollar |
| Bearish euro | 1.10 – 1.14 | Iran escalation, oil above $115, eurozone slips into recession |
The pair has traded in a 5.1% range across 2026 — from 1.1435 on 15 March to 1.2019 on 27 January. For the full dollar picture see our USD forecast 2026.
EUR/GBP forecast 2026: euro to pound outlook
EUR/GBP is trading around 0.8637 (GBP/EUR ≈ 1.158), with the pair held in a tight 0.86–0.88 corridor all year. The structural anchor remains the 175 basis point rate gap between the BoE (3.75%) and the ECB (2.00%) — the widest in the G10.
Two forces are now pulling against that anchor. If the ECB hikes on 11 June while the Bank of England holds at 3.75%, the gap narrows by 25bp and the euro should strengthen. A May 2026 survey of major investment banks by Exchange Rates UK Research sees EUR/GBP drifting back towards 0.88 by year-end. For the sterling side of the equation, see our pound to euro forecast 2026.
| Scenario | EUR/GBP Range | GBP/EUR Range | Trigger |
|---|---|---|---|
| Bullish euro | 0.88 – 0.90 | 1.11 – 1.14 | ECB hikes June, BoE signals cuts later in 2026 |
| Base case | 0.85 – 0.88 | 1.14 – 1.18 | Both central banks data-dependent, rate gap intact |
| Bearish euro | 0.83 – 0.85 | 1.18 – 1.20 | ECB holds, BoE hawkish on stubborn UK inflation |
A 5% move on a €500,000 property purchase equals roughly £22,500 — meaningful money for buyers and sellers. Our experience working with property buyers in Spain and across the eurozone is that timing risk around central bank decisions matters far more on EUR/GBP than headline forecasts do.
Will the euro rise or fall in 2026?
The euro is forecast to strengthen modestly against the dollar and the pound over H2 2026, with EUR/USD averaging in the 1.16–1.19 region and EUR/GBP gradually drifting from 0.86 towards 0.88. The base case assumes the ECB delivers at least one rate hike between June and September, oil stabilises in the $90–105 range, and the BoE holds at 3.75% until Q4.
The clearest risk to this view is a sustained Brent crude move above $115 a barrel, which would force the ECB to choose between fighting inflation and supporting growth — historically a euro-negative outcome.
What this means for euro transfers
| Your situation | Practical approach |
|---|---|
| Transfer in less than 2 weeks | Consider a forward contract to lock today’s rate before the 11 June ECB decision |
| Transfer in 1–6 months | Set a rate alert at your target level and let the market come to you |
| Transfer in 6–12 months | A forward can fix today’s rate for up to 12 months if the level works for your budget |
| Recurring business payments | Stage forwards across the year, or split spot transfers, to smooth your average rate |
For a wider view of timing considerations, see our guide on whether now is a good time to exchange money. Live commentary on every ECB and BoE meeting is published in our weekly currency forecast.
Key ECB and BoE dates: May–December 2026
| Date | Event | Consensus expectation |
|---|---|---|
| 11 June 2026 | ECB rate decision + new projections | 25bp hike to 2.25% (86% priced) |
| 18 June 2026 | BoE rate decision | Hold at 3.75% |
| 23 July 2026 | ECB rate decision | Data-dependent — second hike possible |
| 10 Sept 2026 | ECB rate decision + new projections | Likely peak rate decision |
| 29 Oct 2026 | ECB rate decision | Hold expected if hikes already delivered |
| 17 Dec 2026 | ECB rate decision | Year-end guidance into 2027 |
The 11 June meeting also brings new ECB staff projections — the first since the Iran shock — which the Governing Council uses to anchor its forward path. Lagarde noted at the April press conference that “in six weeks we will be able to make a more informed decision”, signalling that 11 June is when the data, not the rhetoric, decides.
How Cambridge Currencies helps with euro transfers
Cambridge Currencies provides specialist support for individuals and businesses making large euro transfers. We work exclusively with FCA-authorised payment partners (Currencycloud, FRN 900199, and ScioPay, FRN 927951), and every transfer is completed by phone with a dedicated specialist — not via a self-serve app.
For property buyers, our team supports completions across Spain, France, Italy, Portugal and Greece — including timed forwards around scheduled ECB decisions. For UK businesses paying EUR suppliers or repatriating euro income, we can typically deliver tighter rates than high-street banks, particularly on recurring or large-ticket payments.
For the broader picture across all major pairs, see our currency forecasts 2026 hub.
Will the euro get stronger against the pound in 2026?
Possibly. EUR/GBP is trading at 0.8637 (GBP/EUR 1.158) on 12 May 2026 and the consensus bank forecast is for the pair to drift towards 0.88 by year-end as the ECB-BoE rate gap narrows. The single biggest driver is the 11 June ECB decision — an ECB hike alongside a BoE hold would push EUR/GBP towards 0.87–0.88 quickly.
Will the euro get stronger against the dollar?
EUR/USD has already recovered from its March low of 1.1435 to 1.1733. For a sustained break above 1.20, markets need either an ECB hike confirmed on 11 June or a clear Iran de-escalation that pulls Brent crude back below $90. The base case range for Q2–Q3 2026 is 1.15–1.19.
What is the ECB deposit rate in May 2026?
The ECB deposit rate is 2.00%, held unchanged at the 30 April 2026 meeting. The rate has been at 2.00% since the last ECB cut in June 2025. The main refinancing rate is 2.15% and the marginal lending rate is 2.40%. The next decision is on 11 June 2026, with markets pricing an 86% probability of a 25bp hike.
Can I lock in today’s euro rate for a future transfer?
Yes. A forward contract fixes today’s exchange rate for settlement up to 12 months ahead, with no upfront cost. Forward contracts are particularly useful ahead of scheduled ECB or BoE decisions where intraday moves of 1–2% are not unusual.
Is the euro expected to go up or down?
The euro is forecast to strengthen modestly over the second half of 2026, with EUR/USD averaging 1.16–1.19 and EUR/GBP drifting from 0.86 towards 0.88. The base case assumes at least one ECB rate hike between June and September. A sustained Brent crude move above $115 would reverse this view.
What was the euro’s high in 2026?
EUR/USD reached a 2026 high of 1.2019 on 27 January 2026. GBP/EUR’s 2026 high was 1.1597 on 19 March. The average EUR/USD rate across 2026 to date is 1.1707.
When is the next ECB interest rate decision?
The next ECB monetary policy decision is on Thursday 11 June 2026, with the announcement at 13:15 BST followed by Lagarde’s press conference at 13:45 BST. The June meeting also includes new staff macroeconomic projections, which makes it a particularly market-sensitive date.
What is driving the euro right now?
Three factors dominate: the ECB’s shift towards a potential June hike, eurozone inflation rising to 3.0% in April on energy prices, and Brent crude holding above $105 a barrel on US-Iran tensions. Trump’s threat of higher EU tariffs from 4 July is an additional downside risk.
Speak to a Cambridge Currencies specialist for a live euro rate, forward contract pricing or transfer guidance on Spain, France, Portugal, Italy or other eurozone payments. Request a free quote — every transfer is completed by phone with a dedicated specialist working through FCA-authorised partners.
