The EUR/GBP cross trades on a flat note around 0.8760 during the early European session on Friday. This move follows the Bank of England’s (BoE) interest rate cut and market expectations for a steady European Central Bank (ECB) policy. The UK Retail Sales report for November will be in the spotlight later on Friday.
The UK central bank decided to cut its main interest rate by 25 basis points (bps) to 3.75% on Thursday, which was largely expected by the market after cooling UK inflation figures. BoE Governor Andrew Bailey stated that “the extent of further easing in monetary policy will depend on the evolution of the outlook for inflation.” Analysts expect the BoE could next cut in early 2026 if economic data continue to allow for more room or manouver.
On the other hand, the European Central Bank (ECB) kept its key policy rate on hold. The decision came in line with the market expectations. ECB President Christine Lagarde said during the press conference that policy is “in good place,” signaling that rates will remain on hold for a long time. A fresh forecast followed the rate decision, predicting stronger economic growth and inflation rising to 2% in 2028 after staying below that level for most of the next two years.