EUR/GBP Extends Gains Ahead of Bank of England Rate Decision

Contrary to expectations, business activity in the services sector of the eurozone’s major economies improved, which also lifted the overall index. France’s services PMI rose to 48.0 points versus 47.1 expected, while Spain’s climbed to 56.6 from forecasts of 54.8. Italy and Germany also saw their readings increase—from 52.5 and 51.5 to 54.0 and 54.6, respectively.

As a result, the composite eurozone services index reached 53.0 points, exceeding both the previous 51.3 and the forecast of 52.6. The S&P Global composite PMI rose to 52.5, beating the 52.2 estimate — a positive trend that continues despite ongoing trade uncertainty. Meanwhile, Germany’s industrial orders jumped from –0.4% to 1.1% in September, turning positive for the first time since April, suggesting the national manufacturing sector may be emerging from crisis. The eurozone producer price index moved from –0.4% to –0.1% month-on-month and from –0.6% to –0.2% year-on-year, remaining negative but confirming further disinflation in wholesale prices. Under these conditions, European Central Bank (ECB) officials are unlikely to return to a dovish stance in the near term.

The British pound, in contrast, remains less stable despite supportive macroeconomic figures. Today at 14:00 (GMT+2), the Bank of England holds its policy meeting. This time, the number of members opposing the current 4.00% interest rate has increased, and analysts expect at least three policymakers to vote for a rate change, while six may favor maintaining it. Economic activity continues to recover, with the services PMI rising from 50.8 to 52.3 (versus the 51.1 forecast) and the composite PMI climbing from 50.1 to 52.2. These readings strengthen the case for a dovish bias. However, later this month, Finance Minister Rachel Reeves will present the national budget. Although details remain undisclosed, experts estimate the government’s spending plans could be financed not through external borrowing but by raising tax burdens by £26–30 billion, potentially putting pressure on the economy in the near term.

Against this backdrop, EUR/GBP is likely to remain in a local uptrend, though growth momentum may slow and transition into a sideways range.

Support and Resistance Levels

The pair trades well above the support line of the ascending channel with dynamic boundaries between 0.8700 and 0.9000.

Technical indicators have fully turned upward, reinforcing the buy signal: the fast EMAs on the Alligator indicator remain above the signal line, while the AO histogram forms correction bars above the zero level.

Support levels: 0.8760, 0.8630.

Resistance levels: 0.8840, 0.8980.

Trading Scenarios and EUR/GBP Forecast

If the correction continues and the price consolidates above 0.8840, long positions with a target at 0.8980 will be relevant. Stop-loss — 0.8780. Estimated duration: 7 days or more.

If the decline resumes and the price consolidates below 0.8760, short positions may be opened with a target at 0.8630. Stop-loss — 0.8840.