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- EUR/GBP gathers strength to around 0.8675 in Monday’s early European session.
- Signs that the ECB appears to be near the end of its rate-cutting cycle underpin the Euro.
- Analysts suggest the upbeat UK November GDP data may reduce the pressure on the BoE to accelerate rate cuts.
The EUR/GBP cross gains traction to near 0.8675 during the early European trading hours on Monday. The Euro (EUR) edges higher against the Pound Sterling (GBP) as the European Central Bank (ECB) signaled it is on a steady rate path for now, with no near-term debate on further rate changes if current economic projections hold.
The ECB has kept rates on hold since ending a rate cut cycle in June 2025 and hinted last month that it was in no hurry to change policy again. The Governing Council will continue to follow a “data-dependent and meeting-by-meeting approach,” without pre-committing to a specific future rate path. Policymakers further stated that decisions will be based on the assessment of the inflation outlook.
Stronger-than-expected monthly Gross Domestic Product (GDP) data released last week tempered Bank of England (BoE) rate cut bets and made a rate cut in February less likely. This, in turn, could provide some support to the GBP and act as a headwind for the cross. The UK economy grew by 0.3% MoM in November, following a contraction of 0.1% in October, well above forecasts of a 0.1% expansion.
Traders will take more cues from the key UK economic data later this week, including the employment and Consumer Price Index (CPI) inflation data. These reports could offer some hints about the BoE’s monetary policy outlook. If the readings show stronger-than-expected outcomes, these could lift the Pound Sterling in the near term.
