EUR/GBP Euro is tests support at 0.8800 area with all eyes on the BoE

• The Euro remains on its back foot against the Pound, testing levels below 0.8800.
• Downbeat Eurozone Retail Sales have increased pressure on the common currency
• The BoE is expected to stand pat on rates, although a quarter-point rate cut is not discarded.

The Euro remains on its back foot against the British Pound for the second consecutive day on Thursday. The pair's upside attempts seen during the Asian trading session have been capped at 0.8815, and is testing levels below 0.8800 at the time of writing, with markets awaiting the Bank of England's (BoE) monetary policy decision.

Macroeconomic data from the Eurozone has failed to support the common currency. September's Retail Sales figures, released by Eurostat, revealed that consumption dropped 0.1% from August, against market expectations of a 0.2% growth. Beyond that, the previous month's reading was revised down to -0.1% from previous estimations of a 0.1% increase.

The British Pound, on the other hand, is showing strength ahead of the BoE monetary policy decision. The central bank is expected to leave its benchmark interest rate unchanged at 4%. However, market speculation about the possibility of a quarter-point rate cut has increased following Finance Minister Rachel Reeves' hint at significant tax rises on Wednesday.

Reeves rattled markets in an unusual pre-Budget speech at Downing Street, affirming that she will make the "necessary choices" in the Budget, pressured by the dire situation of the UK's public finances. When questioned about Labour's pledge not to hike taxes, Reeves refused to give a clear answer and said that she was "setting the context for the Budget".