The euro has weakened against sterling for several sessions, and the pair now trades near 0.8395, its lowest reading in almost a year and a half. Brokers at Fonndure look at what is pushing EUR/GBP lower and whether the move still has room to run.
Euro Slips To A Multi-Month Low
On Tuesday, October 20, EUR/GBP traded around 0.8395, after touching a low close to 0.8389. That is the weakest the single currency has looked against the pound since May 2025, or put differently, sterling is at its best against the euro in about seventeen months.
Two currents are meeting here. Traders expect borrowing costs to rise in Britain, which lifts the pound, while concerns over European politics and government debt are draining confidence in the euro. When both currents flow in one direction, a pair can keep trending longer than most people expect.
Paris Is The Weak Spot
Most of the worry about the euro points to France. Street protests have returned, and lawmakers face a hard task in agreeing next year’s spending plan while the shortfall in public finances stays wide. Paris is paying more to borrow than at any point in about two decades, and the premium it pays over German debt has grown.
Why does this reach the currency market? Bond investors who ask for extra compensation from one eurozone government may soon ask the same of others. That outcome is far from certain, and it depends on whether the strain stays local. Even so, it gives traders a simple reason to favour the pound for now.
Oil Adds A Twist
The war in the Middle East brings another factor into play. The North Sea benchmark crude traded over $111 a barrel on Tuesday, the strongest reading since spring, while shipping risks in the Gulf remain unresolved. Costly fuel feeds through to transport, household bills and company expenses on both sides of the Channel.
For Britain this strengthens the argument for tighter policy, and that helps sterling in the near term. The risk comes later. Expensive energy squeezes family budgets and corporate profits, so if the pain becomes severe, investors may start doubting whether more rate rises are wise. At that point the pound could give back some of its recent edge.
British Pay And Jobs Figures
Sterling also drew support from the latest labour report. Pay rose a bit faster than economists predicted, and the jobless rate slipped to a fresh recent low. Strong earnings can keep inflation above the Bank of England’s target for longer, which is exactly what policymakers want to avoid.
Futures show traders are nearly certain that the Bank will lift its policy rate by a quarter point on November 5, taking it from 3.75% to 4%. Further increases are expected in 2027, though investors are far less sure about how many.
The Weaker Side Of The Data
A closer look at hiring is less encouraging. The count of open positions has dropped to a level not seen outside the pandemic years for over a decade, which hints that employers are holding back.
This leaves a gap between market hopes and economic reality. The numbers justify a November increase more easily than a long run of them. If the Bank delivers the move but sounds guarded about what follows, the pound’s rate advantage might shrink fast.
Key Levels And Scenarios
The recent low near 0.8389 is the level to watch. A decisive break below it would confirm that sellers still control the pair and could extend the slide toward fresh multi-month lows.
Euro buyers would find relief if oil eased, if the French situation calmed, or if investors judged that British hikes are already in the price. That would allow a bounce, although a lasting turnaround would need clear improvement in European sentiment.
What Traders Can Do
A widely expected event often moves prices less than headlines suggest. Because the November hike is largely anticipated, the Bank’s guidance after the decision may matter more than the decision itself. Waiting for the announcement before committing new positions, and placing a stop before entry, can reduce the risk of reacting to noise.
Conclusion
EUR/GBP trades near 0.8395, pressured by hike expectations in the United Kingdom and political and fiscal stress in Europe. The 0.8389 low is the key level to defend for buyers, while the Bank of England’s tone on 2027 is likely to shape the next move.
Traders following Forex strategies should watch the November 5 decision, French bond markets and energy prices, since these factors are likely to decide whether the pound extends its lead or the euro stages a recovery.