The EUR/GBP pair began the new week with a slight weakening, pulling back from Friday's monthly high, which was set in the 0.8745–0.8750 supply zone. Today, spot quotes are trading below the 0.8730 level, breaking a three-day winning streak — though a significant decline is not expected.

Ongoing expectations of monetary policy easing by the Bank of England and uncertainty over UK fiscal conditions ahead of the November Autumn Budget may continue to weigh on the pound, thereby supporting EUR/GBP's upward movement.

The market has strengthened its expectations for a 25-basis-point rate cut by the Bank of England in November, given stable consumer inflation in September amid deteriorating labor market conditions — factors that reinforce the case for a rate cut by the end of the year.

In contrast, there is a growing conviction that the European Central Bank (ECB) has completed its rate-cutting cycle. There remains a possibility of a 25-basis-point rate reduction by the end of 2026, which for now could give the euro an advantage over the pound and provide additional support for the pair.

Meanwhile, domestic political uncertainty in France may limit active euro buying, restraining the pair's growth. Olivier Faure, leader of France's Socialist Party, has threatened to overthrow the government of Prime Minister Sebastien Lecornu if their budget demands are not met.

Moody's has revised France's outlook to negative while affirming its AA3 rating, citing domestic political risks that could hinder efforts to address key economic challenges, including a widening budget deficit and rising debt burden. Traders are advised to exercise caution and wait for Thursday's ECB decision before forming new positions in the EUR/GBP pair in the near term.

From a technical standpoint, daily chart oscillators are positive, and the 9-day EMA has crossed above the 14-day EMA, signaling a bullish bias among traders. A firm move above the 0.8730 level would increase the likelihood of retesting the monthly high.

However, if prices fail to hold above 0.8720 (the Asian session low), they could decline toward the next support level — the 9-day EMA, just above the psychological 0.8700 level.