BoE and ECB rate decisions dominate the European session today, with EUR/GBP likely to be the key FX mover. Technical signals suggest scope for the cross to retest November’s short-term top, though direction will depend primarily on the BoE outcome rather than the ECB.
The BoE is widely expected to resume policy easing by cutting Bank Rate by 25bps to 3.75%. That move should be seen as a return to form rather than a shift in strategy. The BoE has already been operating on a quarterly cut cadence since mid last year, and today’s move was effectively delayed from November due to the Autumn Budget.
The key questions now are whether the easing cycle continues and how deep it ultimately runs. The answer to the first is likely yes, while the second remains far less clear. Inflation has cooled meaningfully, but it is still above target, leaving policymakers cautious about how far rates can fall.
This week’s weaker-than-expected employment and inflation data may start to soften resistance among more hawkish MPC members. That shift could show up in today’s vote split. Markets will be watching closely for any dissent, and whether a clear majority emerges in favor of the cut.
If the vote shows broad support, expectations for a follow-up cut in February would firm. That would simply mark a return to the quarterly easing rhythm, aligned with the first meeting of the quarter and the release of new economic projections, rather than signaling a more aggressive easing stance.
By contrast, the ECB decision is likely to be a non-event. Policymakers have been clear that rates are comfortable at current levels for the foreseeable future, with inflation anchored close to the 2% target and no immediate risk of deviation.
While speculation has emerged that the ECB’s next move could be a hike, potentially by late 2026, that discussion appears premature. President Christine Lagarde is likely to push back against such talk today.
Technically, near term price actions suggests that EUR/GBP’s corrective fall from 0.8863 has completed at 0.8720 after drawing support from 55 D EMA. Firm break of 0.8800 resistance will solidify this bullish case. And more importantly, that would suggest that rise the up trend from 0.8221 is in progress and ready to resume through 0.8863. Though, rejection by 0.8800 will open up another fall through 0.8720 towards 0.8631 support instead.
