UK GDP data for Q3 is predicted to display 0.1% quarterly growth and 1.3% annual growth. Should these figures underperform expectations, the GBP might weaken against the EUR.<\/p>\n
The Pound Sterling is the United Kingdom’s official currency, with trading figures reaching an average of $630 billion daily in 2022. Influences on its value include monetary policy by the Bank of England, economic data releases, and the trade balance, while key trading pairs include GBP\/USD, GBP\/JPY, and EUR\/GBP.<\/p>\n
We are seeing the EUR\/GBP pair soften below 0.8750, but we shouldn’t lose sight of the bigger picture. The Bank of England is cutting rates while the European Central Bank remains on hold, creating a clear policy divergence. This fundamental split should favor the Euro over the Pound in the coming weeks.<\/p>\n
The immediate focus is the UK Q3 GDP release later today, with expectations for a modest 0.1% quarterly growth. We recall the near-recessionary environment of 2024, which makes any deviation from this forecast significant. This uncertainty is likely reflected in elevated short-term implied volatility for EUR\/GBP options.<\/p>\n
We believe the BoE’s rate cuts, bringing the rate down to 3.75%, are a direct response to the rapid fall in inflation we saw throughout 2024, when the headline rate dropped from over 4% to near the 2% target. This contrasts with the Eurozone, where inflation proved stickier, giving the ECB reason to pause. The market has priced in these cuts, but any future weakness will accelerate the trend.<\/p>\n
Therefore, we see the current softness in EUR\/GBP as a potential entry point for strategies that profit from a rising pair. Any strength in the Pound, possibly from a better-than-expected GDP print, could be short-lived against the backdrop of monetary easing. We would consider using dips towards the 0.8700 level to position for a move back towards the 0.8850 resistance seen earlier this year.<\/p>\n
We must also watch for signs that the UK economy is bottoming out, which would challenge this outlook. The BoE\u2019s own upgraded growth forecast for 2025 to 1.5% is a key risk factor that could limit further rate cuts. This suggests using options strategies that cap potential losses might be prudent if entering long positions now.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/GBP dips as traders await UK Q3 GDP; BoE rate cut contrasts with ECB\u2019s steady stance.<\/p>\n","protected":false},"author":62,"featured_media":17037,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43355","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t