The EUR/GBP pair eased to around 0.8820 during early European trading on Thursday, extending its mild pullback despite growing expectations that the Bank of England (BoE) will cut interest rates in December. Traders now turn their attention to upcoming German Producer Price Index (PPI) data and the Eurozone Consumer Confidence report, both due later in the day.
Weak UK Data Reinforces BoE Cut Outlook
Recent UK economic indicators have fueled speculation that the BoE may begin easing sooner rather than later.
- October CPI slowed to 3.6% YoY, matching expectations and down from 3.8%.
- Disappointing GDP and Industrial Production readings further signaled weakening economic momentum.
This combination of softer inflation and sluggish activity has strengthened bets on a December rate cut, limiting downside in the EUR/GBP cross.
Market sentiment toward the Pound is also being clouded by uncertainty ahead of the UK’s autumn budget, set for release on November 26. The fiscal outlook could play an important role in shaping the BoE’s policy path over the coming months.
ECB Likely to Hold Rates Through 2026
While the BoE faces rising pressure to ease, the European Central Bank (ECB) continues to adopt a more cautious approach. A Reuters poll revealed that most economists expect the ECB to keep rates unchanged at least until the end of 2026, supported by:
- Inflation stabilizing near the 2% target,
- Steady GDP, and
- Unemployment remaining at historically low levels.
This contrast in policy expectations lends some support to the Euro, cushioning EUR/GBP from deeper losses.
