28 October marked UK Budget Day, introducing measures that could save businesses £800 million annually through streamlined regulations, tariff suspensions, and more.
It could additionally have broader effects in areas such as government borrowing, taxes and spending, and economic growth, as we previously reported.
This year’s Budget also coincides with a strong British pound: GBP prices rose leading up to Budget Day amidst months of confidence in the UK economic landscape.
That means UK businesses holding GBP are now in a position to maximise value on euro-denominated transactions — but it’s unclear how long the rate advantage will last. Strategising is critical, and we’ll explain what steps you can take.
What the UK Budget Announced for Businesses
The UK Budget includes several measures designed to benefit businesses:
- Simpler compliance: Streamlined regulations, tariff suspensions, and other measures are expected to save UK businesses £800 million annually.
- Tax commitments: The UK government said it would not raise headline rates of income tax, National Insurance contributions, and value-added tax (VAT). It also remains committed to its existing 2024 Corporate Tax Roadmap.
- Supply chain and import relief: The UK suspended tariffs on imports of select items in order to lower costs for businesses and consumers.
- Mileage tax relief: Employees who are reimbursed for driving their own vehicles for work will be able to receive more compensation at a tax-free rate.
- Digital marketplaces: From October 2027, online marketplaces will need to collect VAT from certain third-party sellers, helping combat VAT evasion and produce fairer competition among UK businesses.
These changes are broadly intended to directly reduce costs and challenges for UK businesses, but they’re also expected to support the UK economy. That’s important for companies that use GBP in their day-to-day transactions.
How GBP/EUR Moved on Budget Day
The British Pound Rose Leading Up to Budget Day
UK Budget Day coincided with an exceptionally strong British pound. GBP/EUR traded close to 1.20 on and around Budget Day, reaching a 17-month high.
It also marks significant increases over shorter time frames. GBP/EUR closed at 1.1956 on 28 October 2026. That marks a one-month increase of about 2.9% and a one-year increase of about 4.4%, based on market values at closing time.
As of publication, 3 November, GBP is up slightly higher at 1.1998.
What Pound-to-Euro Forecasters Expect
GBP/EUR forecasts generally point to a downward trend despite current highs. Exchange Rates UK’s survey of 21 providers on October 29 showed a 95% bearish outlook for GBP over one to three months, with the rest expecting sideways movement.
However, some reports show long-term optimism: in its sample of 12 providers, 8% had a bullish outlook for GBP for the last quarter of 2027, and 17% had a sideways outlook.
Exchange Rates UK also projects precise rates. It forecasts GBP/EUR will fall close to 1.17 in one month and close to 1.15 in three months and later.
What It Means for Businesses That Use GBP and EUR
The current strength of the British pound makes it ideal for cross-currency spending with European partners. UK businesses that already hold GBP may want to spend it on EUR-denominated invoices, as each pound will be worth more euros.
On the other hand, you’ll receive less value when performing EUR-to-GBP conversions, such as collecting inbound payments in euros and converting them to pounds.
And remember: exchange rates can shift suddenly and the pound may or may not maintain its current highs. Your business should strategise accordingly.
Consider holding both EUR and GBP balances so that you can use each currency at the right time, especially when rates are in your favour. You can also try to offset costs by structuring your trading activities to qualify for tiered FX pricing.
How Payset Can Help
At Payset, we offer convenient and affordable payment options suitable for businesses in the UK, throughout Europe, and in other regions around the world.
Here’s what you’ll get with a Payset multi-currency IBAN account:
- GBP, EUR, and more: Send, receive, and exchange up to 35 currencies.
- Global transactions: Send and receive money in 180+ countries.
- Local payment rails: We route payments through UK networks including CHAPS and FPS as applicable, and on other networks like SWIFT and SEPA.
- Built-in FX trading: Trade supported currencies with real-time rates and reduce your fees by qualifying for our tiered FX program.
- Business features: If the 2026 UK Budget helps accelerate your business, it’s easier than ever to scale up with our all-in-one multi-currency accounts.
- The UK advantage: We’re authorised by the FCA as an Electronic Money Institution (EMI) and we safeguard funds in accordance with UK law.
FAQ
How did the GBP/EUR exchange rate move alongside the UK Budget?
GBP/EUR traded close to 1.20 on and around the autumn Budget Day, marking a 17-month high. While the UK Budget may or may not have affected prices, a stronger pound likely indicates broad confidence in the UK economy and GBP itself.
Will the pound become stronger or weaker in the coming months?
Many forecasts predict that GBP will weaken against EUR. Exchange Rates UK predicts GBP/EUR will be near 1.17 in one month and 1.15 in three months.
How can businesses manage GBP/EUR exchange-rate fluctuations?
Businesses can manage GBP/EUR fluctuations by strategically holding and spending both currencies, planning trades to qualify for discounted tiered FX trading, and using Payset’s free GBP to EUR converter to monitor FX rates.
