The EUR/GBP currency pair is currently around 0.8650 as market participants await the UK’s GDP report. The Bank of England may continue on its current course due to weak job market conditions, while the European Central Bank is likely to keep interest rates steady for now. During European trading, the EUR/GBP pair remains stable. Attention is on the policies of both the Bank of England and the European Central Bank. Ongoing risks in the UK job market could affect the Bank of England’s policy, especially since inflation is above their 2% target.

Surveys Show Low Labour Demand

Recent surveys show low demand for workers. Wage growth is picking up as companies slow their hiring due to rising social security costs. Stakeholders are looking to the UK’s GDP report for November, which might show stagnation after a 0.1% decline in October. Data on Industrial and Manufacturing Production will also be released. Despite economic struggles, the European Central Bank is not expected to change its policy soon since inflation is close to their target. The UK releases GDP figures monthly and quarterly, with the next report set for January 15, 2026. A rise in GDP is usually seen as good news for the Pound Sterling. Currently, the EUR/GBP pair is calm, but pressure against the Pound is rising. The key difference is that the European Central Bank is expected to keep rates steady, while the Bank of England is hinting at future cuts. This divergence suggests that the Euro may outperform Sterling in the coming weeks. Looking back to late 2025, data pointed to weaknesses in the UK economy. For instance, the Office for National Statistics (ONS) reported a sharp 1.9% drop in UK retail sales over the three months ending in November 2025, reflecting weak consumer confidence. This trend supports our belief that the Bank of England might need to lower rates sooner rather than later.

Trading Strategy Before GDP Release

With the UK’s November GDP numbers due on January 15, we should consider buying call options on EUR/GBP. If the report confirms economic stagnation or is worse than expected, the pair could rise. We can aim for options that expire in late February, giving the trade time to develop beyond the initial data release. Of course, surprises can happen, and a stronger-than-expected GDP figure could lead to a short-term drop in EUR/GBP. However, implied volatility for one-month options has risen to 6.2% from 5.8% last month, indicating the market is preparing for a move. This makes using options to manage risk a smart strategy. We recall a similar situation in the third quarter of 2025, when multiple weak UK purchasing managers’ index (PMI) readings led to a significant drop in the Pound. The current weak employment and production figures are following this familiar pattern. A flat or negative GDP report this week would likely result in a similar move, pushing EUR/GBP towards the 0.8700 level. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now