The EUR/GBP cross is posting mild gains early Monday, trading near 0.8790 in the European session. A softer-than-expected UK Retail Sales reading for October is pressuring the Pound Sterling (GBP), allowing the Euro (EUR) to edge higher ahead of Germany’s November IFO Business Survey due later in the day.
UK Retail Sales fell for the first time in five months, dropping 1.1% month-over-month in October versus September’s 0.7% increase (revised from 0.5%). The figure missed expectations for flat growth and reinforced concerns about weakening consumer demand.
The combination of lackluster retail activity, slowing PMI momentum, and underwhelming GDP figures has strengthened market expectations that the Bank of England (BoE) may need to cut interest rates sooner rather than later. This has added to the pressure on the British currency.
The UK government’s Autumn Budget on Wednesday is also in focus, with policymakers waiting to assess its economic implications. Chancellor of the Exchequer Rachel Reeves is expected to raise income taxes to address a £22 billion budget shortfall, a move that may further weigh on household spending.
Meanwhile, the European Central Bank (ECB) is widely seen nearing the end of its easing cycle. Analysts expect no rate change in December and assign only a slim probability to an additional 25 basis-point cut in 2026. With Eurozone inflation at 2.1% in October—closely aligned with the ECB’s 2% target—policymakers appear comfortable maintaining current settings.
