EUR/GBP and Euro Market Dynamics – 18 September 2025

The Euro/British Pound pair (EUR/GBP) remained below 0.8700 during the early European trading session on 18 September 2025. The level of 0.8670, observed in the pre‑market window, was largely unchanged from the close of the previous session, which was 0.86941 on 16 September 2025.

Impact of U.S. Monetary Policy

The United States Federal Reserve announced a 25‑basis‑point cut to its target federal funds rate, bringing the range to 4.00 %–4.25 %. The Fed also indicated that at least two further rate reductions are likely to be made later in the year.
European equity markets reacted positively to the policy shift, with the DAX gaining 1.4 % to 23,677 and the Euro Stoxx 50 rising 1.3 %. The optimism surrounding lower U.S. rates is expected to exert a supportive effect on the euro relative to the pound, as lower U.S. rates reduce the yield advantage of sterling.

British Monetary Policy Outlook

Market expectations point to the Bank of England (BoE) holding its Bank Rate at 4.0 % later on 18 September 2025. The BoE’s decision is pending; traders remain cautious, which has contributed to the relative stability of EUR/GBP.
In addition, the European Central Bank (ECB) has maintained that its current rate policy is appropriate given inflation developments, further reinforcing confidence in the euro.

Technical Context

  • Close (16 September 2025): 0.86941
  • 52‑week high: 0.87516 (27 July 2025)
  • 52‑week low: 0.8035 (24 December 2024)

The pair’s position near 0.8670 places it approximately 0.0025 below the 52‑week high and 0.0639 above the 52‑week low. The euro remains in a trading range that is consistent with recent volatility but does not yet show a clear breakout above the recent peak.

Summary

EUR/GBP held steady under 0.8700 on 18 September 2025, with price action largely influenced by the U.S. Fed’s policy announcement and expectations for the BoE’s forthcoming rate decision. The euro’s technical level remains comfortably above its 52‑week low and close to its recent high, suggesting limited upward pressure in the short term.