💶 Euro Extends Gains as Pound Weakens on Political Uncertainty
LONDON, Nov 12, 2025 — The Euro (EUR) advanced against the British Pound (GBP) on Wednesday, reaching new yearly highs as political tensions in the UK and renewed expectations of a Bank of England (BoE) rate cut weighed on Sterling.
At the time of writing, EUR/GBP trades near 0.8836, its strongest level since April 2023, marking the pair’s sixth consecutive day of gains.
🇬🇧 UK Political Turmoil Adds Pressure on the Pound
The Pound Sterling came under selling pressure after reports of growing divisions within the UK Labour Party, with speculation mounting over Prime Minister Keir Starmer’s leadership just weeks before the November 26 budget.
According to UK media, Starmer’s allies have warned that any leadership challenge would be “reckless,” as public support reportedly weakens. The political infighting adds to investor anxiety over potential fiscal tightening and tax increases that could further strain the UK’s economic recovery.
💷 BoE Rate-Cut Expectations Rise Sharply
On the macroeconomic front, disappointing UK labor market data earlier this week reinforced bets that the BoE could lower interest rates at its upcoming December policy meeting.
A Deutsche Bank report noted that the probability of a BoE rate cut has surged from 72% on Monday to 86% on Tuesday, reflecting rising market confidence in monetary easing.
Lower rates typically weaken the Pound as yield-seeking investors shift toward higher-return currencies—such as the Euro.
🇩🇪 Euro Supported by Steady German Inflation and Hawkish ECB
The Euro’s strength also stems from encouraging data and firm messaging from the European Central Bank (ECB).
Germany’s Harmonized Index of Consumer Prices (HICP) rose 0.3% month-on-month and 2.3% year-on-year in October, aligning with expectations and suggesting inflation remains stable.
Meanwhile, ECB policymaker Isabel Schnabel struck a hawkish tone, saying that while rates are “absolutely in a good place,” inflation risks remain “tilted slightly to the upside.” Her comments indicate the ECB is in no rush to cut rates, supporting the Euro’s momentum.
📊 Key Economic Data Ahead: UK GDP and Eurozone Output
Looking ahead, investors are watching a busy Thursday calendar that includes:
- UK Q3 GDP (Preliminary)
- UK Industrial & Manufacturing Production
- Eurozone Industrial Production (September)
These releases could provide fresh direction for EUR/GBP, particularly if UK growth disappoints or Eurozone activity shows resilience.
💱 GBP Performance Snapshot
| Base | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| GBP | -0.49% | -0.40% | — | 0.02% | -0.41% | -0.56% | -0.53% | -0.75% |
The British Pound was weakest against major currencies, losing ground to both the Euro and US Dollar, while showing only marginal stability versus the Japanese Yen.
📈 Technical Outlook: EUR/GBP in Bullish Territory
From a technical perspective, EUR/GBP maintains a bullish bias above 0.8800, with immediate resistance seen at 0.8850 and potential upside toward 0.8900 if political instability in the UK persists.
Support lies near 0.8780, followed by 0.8720.
Momentum indicators, including the Relative Strength Index (RSI), remain positive but nearing overbought territory—suggesting the pair may see short-term consolidation before its next leg higher.
🔍 Summary
- EUR/GBP climbs to yearly highs amid UK political turmoil and BoE rate-cut bets.
- Euro strength reinforced by stable German inflation and hawkish ECB tone.
- Traders eye upcoming UK GDP and Eurozone data for direction.
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