Sterling Weakness Ahead of BoE Meet Drives EUR/GBP Higher

EUR/GBP advanced for the second consecutive session on Wednesday, building on its recovery from Monday's low of around 0.8555.

The rebound reflected broad underperformance of the British Pound as market participants pared GBP positions ahead of the Bank of England's interest rate announcement on Thursday.

According to Brown Brothers Harriman, the GBP is 'vulnerable to a dovish BoE repricing' as markets price in 100bps of hikes versus a steady 3.75% policy rate.

Société Générale warned that tighter UK fiscal policy and a narrowing rate differential could push EUR/GBP toward 0.88 in Q4, citing the key event in the coming weeks as the Budget on October 28.