The EUR/GBP cross extended gains toward 0.8745 in early European trading on Friday, with the Euro (EUR) advancing against the Pound Sterling (GBP) amid expectations that the European Central Bank (ECB) is nearing the end of its rate-cutting cycle. Later in the session, ECB policymakers Piero Cipollone and José Luis Escrivá are scheduled to speak.
ECB outlook supports the Euro
A Reuters poll showed most economists expect the ECB to hold rates steady through the rest of 2025. Growing conviction that the bank has completed its easing cycle is lending support to the common currency. That said, some analysts still see scope for additional cuts later this year or in early 2026 if economic conditions deteriorate. ECB officials continue to stress a data-dependent, meeting-by-meeting approach rather than committing to a fixed rate path.
UK fiscal risks weigh on Sterling
In the UK, businesses have reported weaker momentum and declining confidence ahead of potential new tax increases in Finance Minister Rachel Reeves’ November budget. Fiscal uncertainty has added pressure on the Pound, creating a tailwind for EUR/GBP.
BoE cautious but not rushed
Markets are also watching for signals from the Bank of England (BoE). Policymaker Megan Greene warned on Wednesday that UK inflation risks may prove stronger than forecasts, warranting caution on further rate cuts. Governor Andrew Bailey last week reinforced the need for “gradual and careful” easing. The BoE’s cautious stance may help prevent deeper GBP losses in the near term, though fiscal concerns remain a drag.
