Markets price in another ECB rate hike in September while BoE holds steady, lifting EUR/GBP to 0.8561.
EUR/GBP rose 0.10% to 0.8561 on Wednesday as diverging monetary policy expectations favored the Euro. The cross has traded in a tight 0.8540-0.8580 range since late July, reflecting uncertainty over central bank moves.
The ECB is expected to raise rates by 25 basis points in September, lifting the deposit rate to 2.50%, after a June hike driven by energy price spikes. ECB’s Isabel Schnabel warned of prolonged inflation above the 2% target and stressed early action to curb second-round effects. Meanwhile, the BoE held rates at 3.75%, citing sufficient tightening from financial conditions post-Middle East conflict.
The policy split has kept EUR/GBP elevated, with markets fully pricing in ECB tightening while BoE caution limits GBP upside.