Key Moments
- EUR/GBP slipped back toward 0.8560 after a rebound from the 0.8550 area was capped near 0.8580.
- The Bank of England is expected to keep its key rate at 3.75%, with three policymakers anticipated to favor a 25 bps hike.
- Deutsche Bank flagged that the BoE’s cautious stance may no longer shield the Pound as sterling’s carry edge versus the euro narrows.
BoE Decision in Focus as EUR/GBP Recovery Fades
The Euro (EUR) edged lower against the British Pound (GBP) on Thursday as traders focused on the Bank of England’s (BoE) upcoming monetary policy announcement. At the start of European trading, EUR/GBP was trading just above 0.8560, after a two-day rebound from the 0.8550 region ran into selling interest around 0.8580.
Market consensus points to the BoE maintaining its benchmark interest rate at 3.75% amid a divided Monetary Policy Committee. Governor Andrew Bailey is not scheduled to speak following the decision, leaving market participants to scrutinize the voting breakdown to gauge prospects for future tightening. In July, three committee members backed a 25 basis point increase, and expectations point to a similar split at the September meeting.
Deutsche Bank Sees Risks for Sterling From BoE Stance
Looking ahead, strategists at Deutsche Bank argue that the BoE’s recent strategy of resisting premature market expectations for tighter policy may be losing traction. According to a note from the bank, a “6-3 vote to hold, and largely unchanged forward guidance – as our economists expect – is now unlikely to be sufficient in preventing some sterling weakness,” with the bank also noting that “sterling’s carry advantage against the euro is starting to narrow as the ECB tightens, and has peaked even after adjusting for the fall in implied volume.”
Technical Picture: EUR/GBP Trapped in Mid-Range
From a technical standpoint, EUR/GBP trades around 0.8569, sitting near the midpoint of its two-week trading band, with indicators pointing to indecisive momentum. On the 4-hour chart, the Relative Strength Index (14) is hovering near the neutral line, indicating balanced forces between buyers and sellers. The Moving Average Convergence Divergence (MACD) is marginally above zero on the same timeframe, signaling only mild upside pressure that has not been sufficient to overcome nearby resistance.
Buyers are having difficulty establishing a sustained move above a former support zone around 0.8570, defined by the September 8 low. A confirmed break higher would open the way toward the upper boundary of the recent range, near the 0.8600 region. On the downside, support is expected between 0.8546 and 0.8552, corresponding to the lows recorded on August 26 and September 15, ahead of the August bottom at 0.8531.
Pound Performance Against Major Currencies
The following table summarizes the British Pound’s (GBP) percentage change today versus major currencies. The data indicate that the Pound has been strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.02% | -0.34% | 0.07% | -0.34% | -0.35% | -0.20% | |
| EUR | 0.05% | 0.02% | -0.27% | 0.14% | -0.31% | -0.27% | -0.13% | |
| GBP | 0.02% | -0.02% | -0.29% | 0.10% | -0.32% | -0.33% | -0.13% | |
| JPY | 0.34% | 0.27% | 0.29% | 0.35% | -0.01% | -0.04% | 0.13% | |
| CAD | -0.07% | -0.14% | -0.10% | -0.35% | -0.39% | -0.39% | -0.22% | |
| AUD | 0.34% | 0.31% | 0.32% | 0.00% | 0.39% | 0.02% | 0.14% | |
| NZD | 0.35% | 0.27% | 0.33% | 0.04% | 0.39% | -0.02% | 0.20% | |
| CHF | 0.20% | 0.13% | 0.13% | -0.13% | 0.22% | -0.14% | -0.20% |
The heat map illustrates percentage moves of key currencies against one another. The base currency is taken from the left-hand column, and the quote currency from the top row. For instance, selecting the British Pound as the base from the left column and looking across to the US Dollar cell shows the percentage change for GBP (base)/USD (quote).
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