EUR/GBP Holds Narrow Range as Markets Look to Upcoming UK GDP Report

Key Moments

EUR/GBP Steady Ahead of Key UK Data

EUR/GBP is moving sideways near 0.8650 in European trading on Tuesday.
Price action remains subdued as traders await fresh guidance from the
Bank of England (BoE) and European Central Bank (ECB).

Meanwhile, the pair is consolidating while investors assess how BoE and ECB
policy paths may evolve. Upcoming UK macroeconomic releases and recent
labor market signals are key for near-term expectations.

BoE Outlook Weighed by Soft Labor Market and Persistent Inflation

The BoE is expected to continue moving policy gradually toward easing.
Employment risks in the UK remain, while inflation is still above the
2% target.

On Monday, a survey by the Recruitment and Employment Confederation (REC)
and KPMG showed labor demand stayed subdued in December. Meanwhile, wage
growth increased over the same period.

In 2025, hiring remained weak as firms tried to offset higher employer
contributions to social security schemes.

UK GDP, Industrial and Manufacturing Data in Focus

Investors are watching the UK’s monthly GDP figures for November, scheduled
for Thursday. Consensus expects the economy to be unchanged, after a 0.1%
contraction in October.

November readings for Industrial Production and Manufacturing Production
will also be released on the same day. These will provide further insight
into the UK economy and could influence BoE policy expectations.

ECB Policy Expectations and Euro Drivers

For the Euro, broader market sentiment remains the dominant driver. The
ECB is unlikely to adjust rates soon as Eurozone inflation stays near 2%.
This reduces the need for immediate monetary changes.

UK GDP Indicator Snapshot

The UK Gross Domestic Product (GDP), published monthly and quarterly by
the Office for National Statistics, measures total output of goods and
services. Month-over-month (MoM) readings compare output with the previous
month. Higher GDP generally supports GBP, while weaker readings tend to
weigh on the currency.