Pound-to-Euro Forecast: GBP Hits Three-Week Low on Starmer Pressure

The 0.3% daily decline may appear modest. The breach of the 1.1550 support level, however, carries technical significance. That level had held through several sessions, and its break signals a shift in momentum. The next downside target is the 1.1450 area, which aligns with previous lows from earlier in the quarter. A sustained move below 1.1450 would open the door to a deeper correction toward 1.1400.

Stop-loss selling likely amplified the move once 1.1550 gave way. Traders who had positioned for a bounce were forced to cut losses, accelerating the slide. The pair's relative strength index (RSI) has not yet reached oversold territory, suggesting there is room for further weakness before a technical rebound becomes probable.

Next Marker: UK Inflation and BoE Commentary

The political story will remain a drag on sterling until clarity emerges. The next concrete catalyst for GBP/EUR will be the upcoming UK CPI report. A higher-than-expected inflation print could force the Bank of England to maintain a hawkish stance, potentially offsetting some of the political headwinds. A soft print, however, would reinforce the negative sentiment and could push the pair toward the 1.1450 target more quickly.

Comments from Bank of England officials on the political situation also carry weight. Any hint that the Monetary Policy Committee is factoring political uncertainty into its rate decisions would be a fresh negative for the pound. For now, the path of least resistance for GBP/EUR remains lower, with the 1.1450 level the next key test.

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