The Euro rose above 0.8700, influenced by the Pound’s drop due to below-forecast UK inflation data. September UK consumer prices came in lower than expected, with yearly CPI at 3.8%, below the anticipated 4%, raising expectations for a possible BoE rate cut by year-end.

The Euro-Pound pair displays a sideways pattern with a triangle formation, typically pointing to a bearish outlook. It hit intra-day highs below resistance around 0.8715-0.8730, with 0.8750 as the YTD high target. Support levels include the triangle bottom at 0.8670 and the October lows at 0.8660, with further attention on September and August lows at 0.8635 and 0.8610.

Currency Performance Overview

The table illustrates percentage changes for the British Pound against major currencies today, with the Pound performing the weakest against the Euro. The heat map provides a visual of these percentage changes, where the base currency is indicated on the left column and the quote currency on the top row.

Guillermo Alcala, with qualifications in Communication Sciences from two universities, has experience as a financial news editor and copywriter with Forex-focused companies.

We are seeing the Euro push higher against the Pound, testing the 0.8700 level this week. This move is being driven by Sterling’s weakness after UK inflation for September 2025 came in softer than anticipated. The market is now reacting to the possibility of the Bank of England cutting interest rates sooner than expected.

The latest numbers from the Office for National Statistics confirmed that the annual Consumer Price Index held at 3.8%, missing the 4.0% forecast. Because of this, pricing in the swaps market now implies a nearly 60% chance of a rate cut by the BoE’s December 2025 meeting. This contrasts with the European Central Bank, which is expected to hold rates steady as recent Eurostat figures showed inflation in the bloc remains stubbornly above target.

From a technical standpoint, the EUR/GBP pair is coiling within a triangle pattern, which typically signals a continuation of the prior trend. Looking back, the trend since the highs of early 2025 has been downward, suggesting the next significant move could be a break lower. This consolidation has pushed one-month implied volatility up to 9.2%, reflecting market anticipation of a breakout.

Strategy and Technical Outlook

For those anticipating this bearish outcome, buying EUR/GBP put options with strike prices near the triangle’s support around 0.8670 or 0.8660 could be a viable strategy. A decisive break below this area would bring targets like the September 2025 low of 0.8635 into play. This approach allows traders to position for a stronger Pound while defining their maximum risk.

Given the choppy trading and the conflicting signals, some may prefer a non-directional strategy. A long straddle, involving the purchase of both a call and a put option at the same strike price, could profit from a large price move in either direction. This would be a way to trade the expected breakout from the triangle without betting on whether the BoE’s policy or the technical pattern will win out.

We must remain watchful of the key resistance levels capping the pair’s recent attempts to move higher. A sustained move above the 0.8715-0.8730 zone would invalidate the immediate bearish outlook. Such a break could signal that the market is more concerned about a UK slowdown than the path of interest rates, targeting the year-to-date high of 0.8750.

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