EUR/GBP climbs past 0.8650 as investors look ahead to UK employment figures

EUR/GBP Gains Amid ECB Policy Developments

At the start of the European trading week, the EUR/GBP pair is showing upward momentum, hovering near 0.8685. The Euro is strengthening against the Pound Sterling (GBP), as signals from the European Central Bank (ECB) suggest that its cycle of rate cuts may be drawing to a close. Investors are now turning their attention to upcoming UK employment figures, which are set to be released on Tuesday.

ECB Holds Steady as Inflation Targets Met

With inflation in the Eurozone aligning with the ECB’s goals, policymakers are increasingly confident that interest rates can remain unchanged unless there is a major shift in economic conditions. On Thursday, ECB Vice President Luis de Guindos emphasized that current rates are suitable, but he also highlighted significant uncertainties stemming from global geopolitical tensions.

Market Outlook and Rate Expectations

At present, financial markets anticipate little immediate change from the ECB, with most expecting rates to stay steady at the next meeting. While some experts foresee a potential rate cut in 2026, the likelihood of a rate hike remains low due to the current muted inflation environment.

UK Labor Market Faces Challenges

In 2025, the UK’s job market has continued to struggle, as businesses have reduced hiring in response to higher employer social security contributions. The nation’s unemployment rate climbed to 5.1% in October, marking its highest level since March 2021.

Focus on Upcoming UK Employment Data

Market participants are closely watching Tuesday’s UK jobs report, which could shape expectations for the Bank of England’s (BoE) future policy direction. Signs of further weakness in employment could weigh on the GBP, while a stronger-than-anticipated report may provide support for the currency against the Euro in the short term.