EUR/GBP steady as UK Budget looms, German IFO data limits Euro gains

• EUR/GBP hovers above 0.8800 after a mild intraday pullback.
• Sterling remains broadly steady as markets await Wednesday’s Autumn Budget.
• German IFO readings highlight uneven growth, limiting follow-through for the Euro.

The Euro (EUR) eases off early highs against the British Pound (GBP) on Monday, with Sterling holding broadly steady against most major peers as investors brace for the Autumn Budget on Wednesday. At the time of writing, EUR/GBP is trading around 0.8805, drifting from an intraday high near 0.8819.

While Sterling is steady, underlying sentiment remains cautious as investors look ahead to Wednesday’s Autumn Budget. Chancellor Rachel Reeves is confronting an estimated £20-30 billion fiscal gap, and the government is widely expected to prioritise tax rises over spending cuts to stabilise the public finances. The Budget will also be accompanied by a fresh OBR economic and fiscal forecast.

For the Bank of England (BoE), the upcoming Budget will be closely watched, with a tax-heavy stance likely to dampen domestic demand and strengthen the case for policy easing into year-end. Markets already see rising odds of a December rate cut, and any indication of tighter fiscal conditions could reinforce that narrative.

According to a Reuters poll conducted between November 13 and 18, nearly 80% of economists, or 48 out of 61, expect the BoE to lower the Bank Rate by 25 basis points to 3.75% on December 18, while the remainder forecast no change.

Eurozone data offered limited support for the Euro, with Germany’s November IFO survey pointing to a softer outlook. The Expectations index fell to 90.6 from 91.6, missing forecasts, while the headline Business Climate slipped to 88.1. Current Conditions edged up to 85.6, but the marginal improvement did little to alter the broader picture of subdued momentum in Europe’s largest economy, tempering follow-through in EUR/GBP despite the early rebound.

Investors are also monitoring developments around the US-brokered Russia-Ukraine peace talks, which have contributed to steadier risk sentiment, though the outlook remains far from certain.