EUR\/GBP dipped on Monday after brief volatility linked to UK political concerns. It traded near 0.8658, down from an intraday high of 0.8676.<\/p>\n
Sterling weakened after reports that Prime Minister Keir Starmer faces a Commons vote on a possible probe into whether he misled MPs over appointing Peter Mandelson as US ambassador. MPs are due to vote on Tuesday on whether to refer him to the privileges committee.<\/p>\n
The cross has kept a mild downward tone since the start of the month as markets reassess rate expectations amid inflation risks tied to higher oil prices linked to the US-Iran war. Markets are pricing in possible rate rises from both the ECB and the BoE, with recent UK data pushing expectations further towards tighter BoE policy.<\/p>\n
Both central banks meet on Thursday and are expected to hold rates. The BoE is seen staying at 3.75% for a third meeting, while the ECB is seen holding at 2.00% for a seventh meeting.<\/p>\n
Markets are expected to focus on guidance for the next steps in rates. A BHH report puts expected moves at about 60 basis points of ECB hikes and about 75 basis points of BoE tightening over 12 months.<\/p>\n
We remember looking at the market back in 2025 when the brief political noise around the UK Prime Minister was just a distraction. The real story then was the growing difference in policy between the Bank of England (BoE) and the European Central Bank (ECB). This divergence, driven by higher UK inflation fears from the energy shock, has since become the market’s main focus.<\/p>\n
That expectation for a more aggressive BoE has clearly played out over the last year. As of today, April 27, 2026, the latest UK inflation data showed a stubborn 4.1% reading, while Eurozone inflation has fallen more quickly to 3.5%. This has justified the BoE holding its rate at 4.50%, a significant premium over the ECB’s 2.75%, pushing the EUR\/GBP cross down towards the 0.8520 level.<\/p>\n
Given this backdrop, we should continue to favor strategies that benefit from a stronger Pound relative to the Euro. Selling out-of-the-money EUR\/GBP call options or establishing bearish put spreads allows us to capitalize on this persistent interest rate difference. The market’s conviction in this theme makes these positions compelling for the coming weeks.<\/p>\n
We will be watching the upcoming UK wage growth figures and the Eurozone’s preliminary GDP report very closely. Another strong wage number in the UK would reinforce the BoE’s hawkish stance and likely put more downward pressure on the pair. The economic patterns we saw during the last energy crisis in the early 2020s suggest that UK inflation can be especially difficult to bring down.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/GBP slipped as UK political probe fears hit sterling; traders await BoE and ECB guidance Thursday.<\/p>\n","protected":false},"author":103,"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-48811","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