SEB Pound to Euro Exchange Rate Forecast: 1.11 by End of This Year

SEB forecasts that GBP/EUR will weaken to 1.11 by the end of 2026, down from prevailing levels just above 1.1550 (near one‑month highs). The bank cites UK vulnerability to stagflation from higher energy costs, weaker growth prospects and renewed political/fiscal concerns (including the Mandelson scandal and the May 7 election) as drivers of the downside. SEB says Bank of England policy is unlikely to materially support the pound — rate hikes could deepen growth fears while no hikes would weaken real yield support — although near‑term yield strength may give some temporary support. Overall the note signals downside risk for the pound against the euro and increases the probability of a softening GBP/EUR into year‑end.