The EUR/GBP cross edged lower to around 0.8820 during early European hours on Thursday. However, further downside may be limited as a fresh batch of weak UK economic data has strengthened expectations for a Bank of England (BoE) rate cut in December. Traders now await Germany’s Producer Price Index (PPI) and the Eurozone Consumer Confidence data, both due later on Thursday.
Weak UK data fuels december rate-cut bets
A series of soft UK indicators—including cooling Consumer Price Index (CPI) inflation, lackluster GDP figures, and weaker Industrial Production—has reinforced the likelihood of a BoE policy shift. Data from the Office for National Statistics (ONS) on Wednesday showed headline inflation falling to 3.6% YoY in October, in line with forecasts and down from September’s 3.8%.
UK budget uncertainty weighs on Sterling
Sentiment toward the Pound may face additional pressure amid uncertainty ahead of the UK’s autumn budget. The government’s fiscal update scheduled for November 26 is expected to play a meaningful role in shaping the BoE’s next policy steps.
ECB’s steady stance offers support to the Euro
While the BoE faces mounting pressure to ease policy, the European Central Bank (ECB) remains cautious. Most economists surveyed by Reuters expect the ECB to keep rates unchanged at least through the end of 2026. The case for an extended pause has strengthened since the ECB’s June rate cut, supported by inflation hovering near the 2% target, stable GDP, and unemployment holding at record lows.
