EUR\/GBP traded higher near 0.8725 in early European dealings on Wednesday, moving above 0.8700 and ending a three-day fall. The Pound weakened against the Euro ahead of UK political events, while European Central Bank President Christine Lagarde is due to speak later on Wednesday.<\/p>\n
A by-election is scheduled on Thursday in Manchester\u2019s Gorton and Denton constituency to fill a vacant parliamentary seat. The vote comes as UK Prime Minister Keir Starmer faces internal party tension and low approval ratings.<\/p>\n
In the US, the Supreme Court ruled on Friday against many tariffs introduced by President Donald Trump. On Saturday, Trump said he would impose an additional 15% tariff, and the European Parliament agreed on Monday to delay a vote on the EU\u2013US trade agreement.<\/p>\n
Renewed trade tensions could affect the Euro, as the Eurozone is more exposed to trade disruption than the UK.<\/p>\n
Looking back at the events of 2025, the political risks in the UK were a clear driver for Sterling weakness. The focus on the Manchester special election created uncertainty, pushing EUR\/GBP above the 0.8700 level. We know that by-elections against a sitting government are notoriously difficult, with ruling parties historically losing their seats in over half of these contests since the year 2000.<\/p>\n
However, the bigger threat that we saw unfolding was the renewed trade dispute between the US and the European Union. Similar tariff escalations back in 2018 led to a more than 5% drop in the Euro’s value in a single quarter, as Germany\u2019s export-heavy economy is particularly vulnerable. This risk for the Euro provides a strong cap on how high the EUR\/GBP cross can truly go.<\/p>\n
Given these conflicting pressures, the primary takeaway is an expectation of increased volatility rather than a clear directional trend. One-week implied volatility for EUR\/GBP is already ticking up, moving from an average of 5.5% to nearly 8% in anticipation of these events. Derivative traders should therefore consider strategies like long straddles or strangles, which profit from a large price move in either direction, to capitalize on the impending market chop.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/GBP rose to 0.8725 as UK political risks weighed on Pound; renewed trade tensions pressured Euro.<\/p>\n","protected":false},"author":62,"featured_media":17032,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43579","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