EUR/GBP stalls below 0.8800, awaiting ECB and BoE decisions

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The Euro bounced up from the mid-range of the 0.8700s, and maintains a moderately bid tone in the British Pound on Thursday.

EUR/GBP bounced up from 0.8745, but remains capped below 0.8800.
Cooling UK inflation figures have boosted hopes of a BoE rate cut later today.
The ECB will, highly likely, stand pat and signal a steady policy for the foreseeable future.

The Euro bounced up from the mid-range of the 0.8700s, and maintains a moderately bid tone in the British Pound on Thursday. Euro bulls, however, remain capped below the 0.8785-0.8795 area with investors looking from the sidelines ahead of monetary policy decisions by the ECB and the BoE.

The Pound came under pressure on Wednesday following a sharper-than-expected decline in UK consumer prices, which strengthened the case for a BoE rate cut later today, and fed hopes for further monetary easing down the road.

The Bank of England is widely expected to cut its Bank Rate by 25 basis points to 3.75% later on Wednesday, amid a deeply divided Monetary Policy Committee. A sticky inflation has forced the BoE to keep its benchmark relatively high compared to most of the world's major central banks, but Wednesday's CPI data cemented hopes for at least another quarter-point rate cut in 2026.

Across the channel, the ECB is expected to keep rates on hold for the fourth consecutive meeting. The main attraction of the event will be on the bank’s growth forecasts and President Christine Lagarde’s comments to assess the chances of a rate hike next year.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

Economic Indicator

ECB Rate On Deposit Facility

One of the European Central Bank's three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.