Insights 
VT 
The pound may experience renewed downtrends due to UK services inflation potentially falling short of the Bank of England’s forecast. A predicted 4.6% inflation rate, below the 4.8% consensus, could introduce a dovish trend in the GBP swap curve, impacting the pound.
Uk Services Inflation
Details of the November budget are anticipated, presenting possible challenges for sterling. Concerns regarding fiscal sustainability pose risks, affecting back-end gilts and impacting the pound. The prospect of increased taxation could hamper growth, raising the likelihood of earlier Bank of England easing.
Predictions suggest a bullish outlook for EUR/GBP, with potential risks aiming towards 0.88 as the budget event approaches.
The FXStreet Insights Team comprises journalists who curate market observations from experts, including commercial notes and insights from both internal and external analysts.
We see a growing case for the pound to weaken against the euro in the coming weeks. This outlook is driven by two key factors: expectations of soft inflation data this Wednesday and increasing market anxiety surrounding the upcoming November budget. These events could pressure the Bank of England to consider earlier rate cuts.
November Budget Insights
This Wednesday’s services inflation figure is a critical near-term catalyst. We anticipate a reading of 4.6%, which would be below the Bank of England’s own forecast and would confirm a cooling trend from the 5.2% figure reported by the ONS for August 2025. For traders, this points towards positioning for a dovish market reaction, possibly through buying short-dated put options on GBP.
Looking further ahead, the November budget introduces significant uncertainty for the pound. With recent Office for Budget Responsibility figures showing UK debt at 101.5% of GDP, any signs of fiscal strain or growth-dampening tax hikes could weigh heavily on sterling. This suggests that longer-dated derivative positions, such as buying EUR call options expiring after the budget, could be a prudent strategy to capture potential downside.
We remember how sensitive the market became to fiscal announcements back in the autumn of 2022, when unfunded plans caused a sharp sell-off in UK assets. The flow of news and rumors leading up to this year’s budget could create similar volatility. This environment makes options attractive for managing the heightened event risk.
Given these factors, we see a clear path for EUR/GBP to move towards the 0.88 level. Traders could consider buying EUR call options with strike prices around 0.8700 or 0.8750 to position for this anticipated move higher in the pair. The combination of cooling inflation and fiscal worries creates a compelling bearish case for the pound.
