4.00%: British Pound barely moves against Euro as BoE raises rates

Multi-month lows remain in focus for EUR/GBP following the BoE’s widely anticipated rate rise.
4.00% is the BoE’s new interest rate, following its first increase since 2023.
Around 5% inflation is forecast by mid-2027, with Governor Bailey keeping further tightening on the table.

EUR/GBP stands at around 0.8331 at the time of writing. The pair is down a modest 0.05% on the day, holding close to levels last recorded in April 2025. The British Pound (GBP) lacks a clear direction against the Euro (EUR) on Thursday. Markets have shown little response to the Bank of England’s (BoE) interest rate increase, which was already priced in.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

An 8-1 vote by the Monetary Policy Committee (MPC) on Thursday lifted the BoE’s benchmark interest rate by 25 basis points (bps) to 4.00%. Catherine Mann, an external MPC member, preferred a larger rise of 50 bps to 4.25%.

With its first rate increase since 2023, the BoE joins other major central banks in tightening monetary policy. The aim is to curb inflation fuelled by higher energy costs arising from the war in the Middle East.

Behind the decision is mounting concern that a prolonged conflict could leave inflation elevated for longer. After rising to 3.5% in September, UK Consumer Price Index (CPI) inflation is now forecast to reach around 5% by the middle of 2027.

Policymakers judged that “the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase in Bank Rate.” That assessment came despite limited evidence so far of higher energy costs passing through to wider prices and wages. Economic activity exceeding expectations provided further support for tighter policy.

Unless inflation risks subside, Governor Andrew Bailey indicated he would be open to another rate increase. Bailey said: “Without news which softens the risks to inflationary pressures, I can see the argument for a further increase in rates,” while Chief Economist Huw Pill also argued that one 25 bps rise is unlikely to be enough.

Future decisions will nevertheless hinge on energy prices and their transmission to wages, wider prices and economic activity. The MPC emphasised that “monetary policy is not on a pre-set path,” and said Bank Rate would be adjusted as necessary to bring CPI inflation back to the 2% target over the medium term.

Pound Sterling: Today’s Percentage Moves

The British Pound (GBP) recorded its strongest performance against the Swiss Franc today. Its percentage moves against the major currencies listed are set out in the table below.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.12%	0.09%	0.03%	0.10%	0.14%	0.06%	0.19%
EUR	-0.12%		-0.03%	-0.09%	-0.02%	0.02%	-0.06%	0.06%
GBP	-0.09%	0.03%		-0.06%	0.00%	0.04%	-0.03%	0.08%
JPY	-0.03%	0.09%	0.06%		0.07%	0.11%	0.00%	0.15%
CAD	-0.10%	0.02%	-0.01%	-0.07%		0.04%	-0.05%	0.08%
AUD	-0.14%	-0.02%	-0.04%	-0.11%	-0.04%		-0.06%	0.04%
NZD	-0.06%	0.06%	0.03%	-0.01%	0.05%	0.06%		0.15%
CHF	-0.19%	-0.06%	-0.08%	-0.15%	-0.08%	-0.04%	-0.15%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. To read GBP (base)/USD (quote), for example, choose the British Pound on the left and follow that row horizontally to the US Dollar column. The intersecting cell gives the percentage change for that pair.