Photo by Colin Watts on Unsplash 
 

The EUR/GBP pair trades in a tight range around 0.8650 during the European trading session on Tuesday. The pair consolidates while investors gauge fresh cues about how monetary policy policies by the Bank of England (BoE) and the European Central Bank (ECB) will flair in the near term.

The BoE is expected to keep the monetary policy on a gradual downward path as United Kingdom (UK) employment risks remain intact, while inflationary pressures staying well above the central bank’s 2% target.

On Monday, the monthly survey by the Recruitment and Employment Confederation (REC) trade body and accountants KPMG showed that labor demand remained soft while wage growth accelerated in December.

In 2025, job market conditions remained weak as firms stalled hiring to offset the impact of increase in employers’ contributions to social security schemes.

On the economic data front, investors await the UK monthly Gross Domestic Product (GDP) data for November, which will be released on Thursday. The UK economy is expected to have remained flat after contracting 0.1% in October. On the same day, investors will also focus on the Industrial and Manufacturing Production data for November.

Meanwhile, the major driver for the Euro (EUR) seems to be global market sentiment as the ECB is unlikely to make any adjustment in its monetary policy in the near term, with inflation remaining close to the 2% target.

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