EURGBP climbed to its highest level in more than two years as growing expectations of a dovish shift in Bank of England policy, coupled with mounting concerns over the UK’s fiscal outlook, continued to pressure the pound.

EURGBP extended its advance to a new 2025 peak on Wednesday, holding at its strongest levels since May 2023.

The rally, now in its sixth consecutive session, continues to draw momentum from renewed sterling weakness driven by shifting monetary policy expectations, with markets increasingly pricing in a potential Bank of England rate cut as early as November, ahead of next week’s MPC meeting.

Recent UK economic data reinforced this view, showing inflation steady, wage growth slowing to its weakest pace in nearly three years, and a slight uptick in unemployment — a combination that paves the way for policy easing after prior forecasts indicated no rate cuts this year.

Additional pressure on the pound came from rising concerns about the UK’s fiscal position and budget trajectory.

Technical indicators remain firmly bullish, though overbought readings on the stochastic and RSI hovering near extreme levels suggest that momentum could be moderating, opening the door for short-term profit-taking following the steep rise.

The broader outlook stays positive, with any limited pullbacks likely to be seen as opportunities for renewed upside attempts. Strong supports are seen at 0.8750/40 (former highs / trendline) and the 0.8700 area (rising 10DMA / broken Fibo 61.8%), expected to contain near-term dips.

Res: 0.8817; 0.8835; 0.8875; 0.8900
Sup: 0.8750; 0.8700; 0.8650; 0.8631