The EUR/GBP pair remains range-bound around the 0.8650 level during Tuesday’s European session. Price action is muted as investors wait for clearer signals on the near-term monetary policy outlook from both the Bank of England (BoE) and the European Central Bank (ECB).
The BoE is widely expected to maintain a cautious, gradual easing bias. While inflation in the United Kingdom continues to sit well above the central bank’s 2% target, risks in the labour market remain elevated, limiting the scope for any aggressive policy shift.
Data released on Monday added to this cautious outlook. A joint monthly survey from the Recruitment and Employment Confederation (REC) and KPMG showed that labour demand stayed weak in December, even as wage growth continued to pick up. Looking into 2025, employment conditions have remained subdued, with many firms delaying hiring to absorb the higher cost of employers’ social security contributions.
Market attention now turns to key UK economic releases later this week. The monthly Gross Domestic Product (GDP) data for November is due on Thursday, with the economy expected to show no growth after a 0.1% contraction in October. Industrial and Manufacturing Production figures for the same period will also be closely watched.
On the Euro side, broader global risk sentiment remains the primary driver. The ECB is seen holding its current policy stance for now, as inflation remains close to its 2% target, reducing the urgency for any near-term policy adjustments.
