EUR\/GBP has dipped below 0.88 once more, as GBP\/USD finds demand under 1.31. There is belief that the possibility of a 25 basis point rate cut by the Bank of England in December is underestimated. Current market predictions suggest a 60% chance of this rate cut taking place.<\/p>\n
September wage data is anticipated to decelerate, potentially increasing the Bank of England’s confidence that inflation is less persistent. This data may influence their monetary policy decisions. Should EUR\/GBP fall to 0.8750\/60, strong demand is expected at that level. Levels above 0.88 are currently preferred.<\/p>\n
Looking back, the sentiment was that the pound was set to weaken because the market was underestimating the chance of a Bank of England rate cut. This view was based on the expectation that September 2025’s wage data would show a slowdown, giving the central bank reason to act. That slowdown was indeed confirmed when the data released in October showed wage growth falling to 5.2% from 5.8%.<\/p>\n
This perspective was validated when the Bank of England did cut its key interest rate by 25 basis points later in 2025, pushing EUR\/GBP towards the 0.8900 level. We have since seen UK inflation cool further, with the latest October 2025 figures showing the Consumer Price Index at 2.8%, moving closer to the Bank’s 2% target. This confirms that inflationary pressures, which were a major concern in 2023 and 2024, are now easing more rapidly.<\/p>\n
Now, attention is shifting to the likelihood of further easing in early 2026, as the UK economy shows signs of slowing. Derivatives markets are currently pricing in a nearly 70% probability of another rate cut by the end of the first quarter. This suggests that the path of least resistance for the pound remains downwards against the euro.<\/p>\n
For the coming weeks, we see value in positioning for continued sterling weakness, especially as the narrative of further rate cuts solidifies. Derivative traders could consider buying EUR\/GBP call options with a strike price around 0.8950 for a January 2026 expiry. This strategy allows for defined risk while capturing potential upside if the pair continues its upward trend driven by diverging central bank policies.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/GBP dips below 0.88; BoE December rate cut expectations grow amid anticipated wage deceleration.<\/p>\n","protected":false},"author":62,"featured_media":17034,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-34477","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/34477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=34477"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/34477\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17034"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=34477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=34477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=34477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}