Posted on October 29, 2025
EUR/GBP rose 0.30% on Wednesday, trading around 0.8805, marking its highest level since May 2024. The Euro (EUR) is supported by expectations that the European Central Bank (ECB) will keep interest rates unchanged at its policy meeting on Thursday. The ECB is widely expected to maintain rates for a third consecutive meeting, as inflation remains contained and Eurozone growth shows signs of stabilization.
Markets are now pricing in roughly an 80% chance of the first rate cut in 2026, a shift from September when hawkish ECB rhetoric had ruled out such a move. Investors will closely watch ECB President Christine Lagarde’s post-meeting comments for guidance on the policy outlook.
Euro sentiment is tempered by political uncertainty in France after Standard & Poor’s downgraded the country’s sovereign rating, and mixed economic data, including Spain’s Q3 GDP slowing to 0.6% and retail consumption easing to 4.2% YoY.
The British Pound (GBP) remains under pressure due to soft inflation readings and expectations of higher taxes in the upcoming Autumn Budget, as the Labour government looks to close a £35 billion fiscal gap. Money markets are pricing in a 25-bps Bank of England (BoE) rate cut as soon as November, although most economists still expect rates to remain steady until early 2026.
Ongoing concerns over weak UK productivity and public finance sustainability continue to weigh on the Pound, allowing EUR/GBP to retain a bullish bias ahead of the ECB decision.
