EUR/GBP holds steady above 0.8800 as BoE rate cut expectations grow

• EUR/GBP trades on a flat note near 0.8825 in Monday's early European session. 
• Weak GDP data is increasing pressure on the BoE to stimulate the economy. 
• ECB's Kazāks said there is no need to adjust interest rates in the current situation. 

The EUR/GBP cross flat lines around 0.8825 during the early European session on Monday. Concerns about the UK's fiscal debt and weak UK economic data could undermine the Pound Sterling (GBP) against the Euro (EUR). Bank of England (BoE) External Member Catherine Mann is scheduled to speak later on Monday.

Recent weaker-than-expected UK economic data has significantly heightened market expectations for a BoE rate reduction, potentially as early as the December meeting. The UK economy expanded at a quarterly rate of 0.1% in the third quarter (Q3) of 2025, following a 0.3% growth in Q2, the Office for National Statistics showed last week. The data missed the market forecast of 0.2% in the reported period. The UK GDP grew 1.3% YoY in Q3 versus 1.4% expected and 1.4% in Q2.

Fiscal concerns, combined with expectations of lower interest rates, tend to weaken the Pound Sterling (GBP). Interest-rate swaps indicate an approximately 79% possibility of a 25 basis point (bps) rate reduction from the Bank of England (BoE) at the next meeting on December 18, according to Reuters. 

On the Euro's front, the cautious tone of the European Central Bank (ECB) could provide some support to the EUR against the GBP. ECB policymaker and Governor of the Central Bank of Latvia Mārtiņš Kazāks said on Friday that there is no need to adjust interest rates in the current situation. The central bank will remain vigilant to any dramatic change and will adjust rates if necessary.