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EUR/GBP extends gains as BoE dovish tone and fiscal concerns weigh on Sterling

  • EUR/GBP extends its advance for the second day as BoE’s Dhingra strikes a dovish tone.
  • Softer UK inflation data fuels expectations of a BoE rate cut before year-end.
  • Fiscal worries ahead of Chancellor Reeves’ November budget keep Sterling under pressure.

The Euro (EUR) edges higher against the British Pound (GBP) on Thursday, with EUR/GBP extending gains for the second straight day in subdued trading after Bank of England (BoE) policymaker Swati Dhingra struck a dovish note.

At the time of writing, EUR/GBP is trading around the 0.8700 psychological mark, bouncing off an intraday low near 0.8681 as traders remain cautious ahead of a busy session on Friday.

Market activity stayed quiet as neither the UK nor the Eurozone released major data on Thursday. Investors are instead looking ahead to fresh catalysts from the UK GfK Consumer Confidence index, Retail Sales, and S&P Global preliminary Purchasing Managers Index (PMI), alongside the Eurozone’s HCOB flash PMIs, which are expected to shed light on economic momentum heading into the final quarter of 2025.

In a speech at the Central Bank of Ireland, BoE Monetary Policy Committee (MPC) member Swati Dhingra warned that rising US tariffs and global trade frictions are weighing on UK demand, putting downward pressure on inflation. She also cautioned that keeping interest rates “excessively high” for too long could damage investment and productivity.

Her remarks came just a day after the UK Consumer Price Index (CPI) data showed headline inflation steady at 3.8% in September, below the 4.0% forecast, while core inflation eased to 3.5% and services inflation remained at 4.7%. The softer figures, combined with Dhingra’s comments, have boosted expectations that the BoE could begin cutting rates before year-end.

Money markets now price around a 75% chance of a 25-basis-point rate cut in December, with the November meeting expected to see no change.

Beyond monetary policy, fiscal concerns are adding further pressure on the Pound. UK Chancellor Rachel Reeves faces a widening fiscal gap estimated at up to £30 billion, heightening uncertainty ahead of the 29 November autumn budget. Markets remain cautious that the government may be forced to announce tax hikes or spending restraint to stabilise public finances. Such measures could further dampen growth prospects and investor confidence, keeping Sterling vulnerable in the near term.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD0.02%0.13%0.46%-0.06%-0.33%-0.15%0.06%
EUR-0.02%0.11%0.44%-0.08%-0.34%-0.18%0.04%
GBP-0.13%-0.11%0.33%-0.18%-0.45%-0.29%-0.07%
JPY-0.46%-0.44%-0.33%-0.51%-0.76%-0.62%-0.38%
CAD0.06%0.08%0.18%0.51%-0.26%-0.10%0.12%
AUD0.33%0.34%0.45%0.76%0.26%0.17%0.39%
NZD0.15%0.18%0.29%0.62%0.10%-0.17%0.22%
CHF-0.06%-0.04%0.07%0.38%-0.12%-0.39%-0.22%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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