EUR/GBP holds its position after the release of Germany's Producer Price Index (PPI), trading around 0.8330 during the early European hours on Monday. Producer prices fell by 1.4% year-on-year in September, extending the decline from a 0.8% drop in the previous two months. On a monthly basis, PPI decreased by 0.5%, marking the first decline since February. This drop exceeded expectations of a 0.2% fall and swinging from a 0.2% increase in August.

The Euro faced challenges as the European Central Bank (ECB) decided to cut its interest rates by 25 basis points last week. This could be attributed to a significant drop in inflation, which fell to 1.7% in September, now below the ECB's 2% target.

Additionally, Rabobank's research suggests that the market is interpreting recent comments from European Central Bank (ECB) officials as an indication that they are increasingly comfortable with the Eurozone's inflation outlook. This has fueled speculation about a possible faster pace of ECB easing, including the potential for a larger 50-basis-point interest rate cut.

Declines in both the Consumer Price Index (CPI) and Producer Price Index (PPI) inflation figures, along with weak labor market data in the United Kingdom (UK), are raising expectations that the Bank of England (BoE) may implement a 25 basis point (bps) interest rate cut in November, followed by another quarter-point cut in December. This could weigh on the Pound Sterling (GBP) and support the EUR/GBP cross.

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