EUR/GBP Climbs as BoE Hike Bets Fade and UK Political Risks Rise

EUR/GBP advanced this week after markets scaled back expectations for further Bank of England tightening. Softer UK inflation data and a cautious BoE meeting reduced the odds of additional hikes, weakening sterling. Earlier, Citi flagged a divergence where overseas gilt buying capped the pair near 0.86 despite stronger fundamentals. ING now highlights Andy Burnham’s by-election win as an upside risk, citing potential fiscal headlines and no further BoE rate hikes. Technically, repeated defense of 0.8618 support keeps the bias higher, with a break above 0.8680 opening 0.8728 and the 2025 peak at 0.8863.