The euro edged lower against the British pound on Wednesday, with the EURGBP currency pair oscillating within its familiar one-week range as caution dominates broader forex markets ahead of the Federal Reserve’s interest rate decision later in the day.
The cross traded near 0.8730, easing after touching an intraday high of 0.8751 during early European hours.
With the Fed poised to cut rates, traders are waiting for fresh guidance on the outlook for 2026.
Any adjustment in the policy path could reshape global rate differentials and broader market sentiment, creating spillover effects across major currency crosses, including EURGBP.
At the same time, attention is turning toward next week’s monetary policy meetings from the European Central Bank and the Bank of England.
Markets widely expect the BoE to cut rates at its upcoming meeting.
BoE commentary this week, however, reveals internal divergence. Policymaker Alan Taylor said he expects UK inflation to fall back to the 2% target in the near term, which he believes creates scope for additional rate reductions.
Deputy Governor Clare Lombardelli struck a more cautious tone, noting that some upside risks to inflation remain and arguing that the pace of cuts may need to slow as the BoE nears the end of its current cutting cycle.
In the eurozone, the ECB is expected to keep all three key policy rates unchanged next week. Even so, speculation is building around the possibility of a rate hike next year after a series of firmer remarks from ECB policymakers.
Governing Council member Gediminas Simkus said earlier on Wednesday that there is no need to change rates while inflation is running at the target.
His comments were followed by a Bloomberg interview published Monday, in which Isabel Schnabel said she is “rather comfortable” with market expectations that the ECB’s next move could eventually be a hike.
Adding to the recent commentary, ECB President Christine Lagarde said on Wednesday that the eurozone economy is showing signs of resilience and that the Governing Council may upgrade its growth projections at the December meeting.
She noted that the current policy stance remains appropriate given inflation’s sustained progress toward the target, while also emphasising that the ECB will continue to rely on incoming data to determine the timing of any future adjustment.
(Source: OANDA)
