EUR/GBP Stuck in Neutral as GBP Faces Dovish BoE Repricing

The EUR/GBP exchange rate has been struggling to gain momentum, stuck between the 50-day and 100-day Simple Moving Averages (SMAs), with technical bias remaining broadly neutral. At present, it trades around 0.8580.

Concerns over the UK's deteriorating fiscal outlook and the Bank of England's reluctance to raise interest rates are weighing on the British Pound (GBP). Strategists at Brown Brothers Harriman point out that the UK government borrowed £18.3bn in August, up £2.9bn from August 2025 and £3.5 billion above the Office for Budget Responsibility forecast.

As a result, they warn that 'a tighter UK fiscal squeeze suggests the BoE may not need to raise the policy rate as much as markets expect (100bps in the next twelve months to 4.75%).' This could lead to a dovish BoE repricing, leaving the GBP vulnerable.

On the technical front, EUR/GBP is holding beneath the 100-day SMA at 0.8593 and the 200-day SMA clustered with the 78.6% Fibonacci retracement at 0.8641.