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    EUR/GBP stabilizes near 0.8690 as European Central Bank adopts a cautious tone and Eurozone data approaches

    by VT Markets
    /
    Jan 28, 2026

    Bank of England’s Cautious Approach

    The Bank of England is taking a careful stance on future interest rate cuts. Predictions suggest that rates will stay the same in upcoming meetings. Traders are paying close attention to Eurozone sentiment surveys and early GDP data, as changes could impact the EUR/GBP exchange rate significantly. Today, the Euro is gaining strength against some currencies, like the Swiss Franc, but is declining against others, such as the US Dollar. Market Analyst Ghiles Guezout pointed out a 0.41% change in the EUR/USD pairing, highlighting this as an important trend to watch. Looking back to early 2025, the EUR/GBP pair was steady around 0.8690 while the market responded to cautious signals from the European Central Bank (ECB). Back then, the ECB was worried about inflation risks. Fast forward to today, January 28, 2026, and the situation is quite different, with the pair now trading near 0.8450.

    Potential For Market Reversal

    The focus has shifted dramatically in the last few weeks. With the ECB holding rates steady, markets are anticipating about 75 basis points in rate cuts from the Bank of England throughout 2026 to bolster a weakening UK economy. This changing expectation implies that the year-long downward trend in EUR/GBP could be losing steam. Given this new outlook, traders should consider strategies that prepare for a possible reversal or bottoming in the pair. Purchasing near-term EUR/GBP call options could be an affordable way to tap into a potential recovery, especially if upcoming UK data confirms a deeper economic slowdown. Another strategy is to sell out-of-the-money put spreads, which could benefit from the belief that losses will be limited moving forward. Create your live VT Markets account and start trading now.

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