The EUR/GBP currency pair has fallen after a three-day uptrend, reaching a high not seen in nearly a month. Different expectations for the Bank of England (BoE) and the European Central Bank (ECB) are supporting this currency pair. Traders are cautious about making bold moves ahead of the ECB meeting on Thursday. The pair is trading between 0.8730 and 0.8725, moving down from the 0.8745-0.8750 range hit on Friday. The British Pound is struggling due to expectations of further easing from the BoE and worries over the UK’s economic outlook. The BoE is expected to lower interest rates by 25 basis points in November. In contrast, many believe the ECB has finished cutting rates. Futures suggest a rate drop of 25 basis points may be possible by the end of 2026, which could strengthen the Euro against the Pound. However, political instability in France may prevent strong bullish moves for the Euro. The leader of France’s Socialist Party has warned of government action if budget requests aren’t satisfied. Moody’s Ratings has downgraded France’s outlook to negative due to political issues impacting critical policy challenges. Traders are waiting for the ECB’s decision before making any moves on the EUR/GBP. On Monday, October 27, 2025, EUR/GBP is slightly retreating from the one-month high of around 0.8750. This pause seems temporary, as traders are wary of taking big positions before the ECB meeting this Thursday. Overall, the trend still seems to favor a stronger euro against the pound. The main factor here is the growing gap between BoE and ECB policies. Recent data from early October 2025 shows that UK wage growth is slowing and the unemployment rate has risen to 4.3%. This strengthens the expectation that the BoE will cut rates by 25 basis points in November, which is very different from the ECB, expected to keep rates steady for a while. In the Eurozone, the ECB has no immediate reason to cut rates. Although headline inflation has eased, the latest Eurostat estimate for October 2025 shows core inflation (excluding volatile items) stubbornly above 3.5%. This persistence suggests the ECB’s rate-cutting phase is over for now, providing solid support for the euro. For traders, this indicates a strategy of buying dips in EUR/GBP, especially if the pair breaks above the 0.8750 resistance level. With the upcoming ECB meeting posing some risk, using derivatives like call options could be wise. This approach allows traders to benefit from potential gains while limiting losses if the ECB issues an unexpectedly dovish statement. We’ve seen this type of policy split impact the currency pair significantly in the past. Between 2016 and 2018, conflicting monetary policies between the UK and the Eurozone caused a major rally in EUR/GBP. If the BoE cuts rates while the ECB maintains its stance, a similar, though perhaps less pronounced, upward trend could form through the end of 2025. Still, we need to closely monitor political events in France, as they pose a risk to a stronger euro. With France’s public debt surpassing 112% of its GDP, Moody’s negative outlook could impact the currency if the government’s stability is threatened. Additionally, the UK’s Autumn budget statement in November could lead to further volatility. Create your live VT Markets account and start trading now.

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