- The EUR/GBP is expected to settle around 0.8665 during the early European trading on Monday.
- Optimism over possible discussions between the US and Russia is supporting the euro.
- The Bank of England (BOE) has indicated a cautious approach that may help to stabilize the GBP.
The EUR/GBP is climbing toward 0.8665 during Monday’s early European trading. The Euro (EUR) has gained ground against the Pound Sterling (GBP), driven by hopes of a meeting between US and Russian leaders. However, there might be limits on how much the EUR can advance, especially with the BOE planning to reduce interest rates for Takis.
The euro is gaining appeal due to anticipated increases in regional defense spending, which are likely to bolster the eurozone economy. Additionally, potential discussions between President Donald Trump and President Vladimir Putin this Friday could enhance the EUR’s position. According to Kremlin aide Yuri Ushakov, this would mark the first summit between the leaders since 2021.
At its August meeting, the BOE decided to lower interest rates from 4.25% to 4.0%, adopting a “slow and cautious” stance on monetary easing. Four out of nine policymakers are attempting to stabilize borrowing costs, suggesting that the BOE’s rate-cutting spree might be nearing its conclusion.
The BOE’s more hawkish rate reductions could lend support to the GBP but may also act as a short-term headwind for the cross. Data from LSEG shows that traders have reduced their expectations for another BOE rate cut by the end of 2025 and have fully factored in a rate of 3.75% for February of the following year.
