The EUR/GBP pair rose to about 0.8860 on Friday due to worries about the UK’s financial situation, which is weakening the Pound. UK Prime Minister Keir Starmer and Finance Minister Rachel Reeves have chosen not to raise income tax rates, affecting fiscal forecasts before the November budget. Preliminary GDP data for the UK did not meet expectations, raising concerns about the economy and pushing the Bank of England (BoE) to consider a possible rate cut in December. Now, there is nearly an 80% chance of a 0.25% rate cut by the BoE, which adds pressure on the Pound.

Focus On The Eurozone GDP Report

Attention is shifting to the Eurozone’s GDP report for the third quarter, which is expected to grow by 0.2% quarter-on-quarter and 1.3% year-on-year. If these results are worse than expected, it may limit the Euro’s gains. The Pound Sterling is primarily influenced by the Bank of England’s monetary policies and economic data, including GDP and trade balance figures. A strong economy and a positive trade balance can strengthen the Pound and attract foreign investment, while weak data may cause it to fall. With the current weakness of the Pound, the trend in EUR/GBP is likely to continue upwards. The government’s shift in fiscal policy and poor economic data have created a negative outlook for Sterling. This suggests a bearish trend for the Pound against the Euro in the coming weeks. The UK economy shrank by 0.1% in the third quarter of 2025, confirming fears of a slowdown. This has solidified market expectations, showing an 80% chance of a BoE rate cut in December. The BoE’s shift towards dovish policies is a key factor driving the Pound’s decline.

Concerns Of Fiscal Uncertainty

Current fiscal uncertainty is reminding investors of the market volatility after the 2022 mini-budget. Foreign investors are becoming cautious about the UK’s financial position, putting pressure on UK government bonds and the currency. The upcoming budget on November 26 is now a significant risk event that will keep traders alert. For derivative traders, this situation suggests buying call options on EUR/GBP. This allows for potential profit from a rise in the currency pair while limiting risk to the premium paid. With expected increases in implied volatility ahead of the budget, securing positions now could be beneficial. We should closely monitor today’s Eurozone Q3 GDP figures. If they show growth below the forecast of 0.2%, EUR/GBP could temporarily dip. Such a drop could offer a better entry point for long positions. Additionally, Eurostat reported that Eurozone core inflation remains steady at 2.8%. This gives the European Central Bank less incentive to cut rates compared to the BoE, reinforcing the case for a higher EUR/GBP. Call options around the 0.8900 level look appealing. We will look for a sustained rise above 0.8860 to confirm this upward momentum. Create your live VT Markets account and start trading now.

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