EUR/GBP: the Bank Rate premium over the deposit rate

The euro against sterling (EUR/GBP) reaches 0.8262 by December 17, 2026 in the base case, 0.8169 in the bear case and 0.8439 in the bull case. The base case is the 127.2% extension of the decline in European Central Bank (ECB) reference rates from September 3 to November 3, and it rests on a Bank Rate premium of 150 basis points over the deposit facility after the Bank of England (BOE) lifted Bank Rate to 4%.

A live composite showed EUR/GBP at 0.8334 at 06:49 UTC on November 6, 2026, 5.3 pips under the ECB reference of 0.83393 for November 5. The premium is Bank Rate at 4% minus a deposit facility at 2.50%, and it widened by 25 basis points when the Monetary Policy Committee (MPC) voted on November 5. Four observations, listed below, would retire that path.

Key Levels:
• Asset: EUR/GBP at 0.8334 — Yahoo Finance EURGBP=X composite, 06:49 UTC on November 6, 2026
• Base case target: 0.8262 by December 17, 2026 — 127.2% extension of the ECB decline from 0.86055 on September 3 to 0.83358 on November 3
• Bull case target: 0.8439 — 38.2% retracement, beside the October 14 reference of 0.84385
• Bear case target: 0.8169 — 161.8% extension if the December 17 MPC raises Bank Rate again and the deposit facility stays at 2.50%
• Major support: 0.83358 — November 3 ECB reference, the low from August 10 to November 5
• Major resistance: 0.84028 — October 20 ECB reference
• Invalidation level: a weekly close above 0.84720 — October 5 ECB reference, 1.4 pips above the 50% retracement

How the premium and the reference rates were measured

Rates were read from the issuers on November 6, 2026. The BOE calendar of MPC dates shows Bank Rate at 4% and the next announcement on December 17, 2026. The ECB schedule of Governing Council meetings puts the press conference on that day, after a sitting on December 16. The deposit facility is 2.50% on the ECB key-rate table from September 16, and the October 29 decision left it there. ECB sterling references from August 10 to November 5 run from 0.86055 on September 3 to 0.83358 on November 3. The daily file is still dated November 5. Positioning and options skew are outside the set.

Related:NOK/JPY to 17.40: Norges Bank's hold

What 150 basis points looks like in the cross

Eight members voted to lift Bank Rate by 25 basis points, from 3.75% to 4%, and Catherine L Mann preferred 4.25%. September Consumer Prices Index (CPI) inflation was 3.5%. Staff look for around 4.5% in the first quarter of 2027 and around 5% in the second, with Brent at $108 and UK gas at 216 pence a therm over the 15 working days to October 27.

Sources: ECB euro reference rates and key-interest-rate table; BOE MPC dates page and November 2026 monetary policy summary. Window: August 10 to November 5, 2026. Live print: Yahoo Finance EURGBP=X, 06:49 UTC on November 6, 2026.

The Bank Rate premium over the deposit facility is Bank Rate minus the rate banks earn on overnight euro deposits. On November 5, 2026 the MPC set Bank Rate at 4%, up from 3.75% on September 17, while the deposit facility stayed at 2.50% after the October 29 hold, in force since September 16 on the BOE summary and the ECB key-rate table. The gap is 150 basis points, against 125 basis points the day before. EUR/GBP, the sterling price of one euro, was 0.8334 on the November 6 composite and 0.83393 on the November 5 reference, with the sample low at 0.83358 on November 3. From a high of 0.86055 on September 3 the reference fell 0.02697 to that low. The cross met the hike on the floor of that range, which the forex desk has to price.

"Nonetheless, of itself, a single 25-basis point hike is unlikely to be sufficient. Achieving the level of Bank Rate necessary to confront challenges and risks to lasting achievement of the 2% inflation target is likely to require more policy tightening, including in the near term."

— Huw Pill, member of the Monetary Policy Committee, Bank of England (BOE monetary policy summary and minutes, November 2026)

Why the December meetings can still extend the sterling bid

The survey median was already 4% for November. The reference reached 0.83358 on November 3, bounced to 0.83460 on November 4, and the November 5 fixing of 0.83393 took back 6.7 pips. Pill's remark, that one hike is unlikely to be sufficient, is the unpriced residue against a survey that still has 4.25% in February, and it is the base case only if December 17 leaves the premium at 150 basis points.

The 0.8262 base case extends that autumn range because most of the premium is already in the price. The ECB sample runs from 0.86055 on September 3, 2026 to 0.83358 on November 3, a range of 0.02697. A 127.2% extension adds 27.2% of the range below the low: 0.272 times 0.02697 is 0.00734, and 0.83358 minus 0.00734 is 0.82624, or 0.8262, which is 72 pips under the November 6 composite of 0.8334. It matches a premium widened by 25 basis points and then left at 150 basis points through December 17. It needs the minutes to keep a further near-term rise plausible, as Huw Pill argued, and the Governing Council to leave the deposit facility at 2.50%. If either leg fails, the 38.2% retracement at 0.8439, beside the October 14 reference of 0.84385, replaces it.

A second Bank Rate rise on December 17, the step Mann already wanted, would take the premium to 175 basis points if the deposit facility stays at 2.50%, and that is the 0.8169 bear case. Minutes that knock 4.25% out of the February survey are the bull case, read the way an ECB hold has been read through the BEL 20. Taylor framed November as insurance, the objection a traded premium has to answer.

Where a priced hike leaves the rate-gap model short

The deposit facility rose to 2.50% on September 16 and the premium narrowed to 125 basis points, yet the reference was still 0.86045 on September 25. The decline came in October as the November hike was priced. The range used here starts on August 10, 2026. The domestic channel of the same vote is the priced Bank Rate step in the FTSE 250.

"Rather, from an already restrictive position, this is a risk-management ‘one-for-now’ insurance hike. What has changed since July, and even September, is the magnitude of the energy disruption. A second, larger shock has roughly doubled the inflationary impulse."

— Alan Taylor, member of the Monetary Policy Committee, Bank of England (BOE monetary policy summary and minutes, November 2026)

What would invalidate the base case

The base case to 0.8262 by December 17 breaks if any one of these four observations prints.

• The December 17 minutes retire a further near-term rise. Without Pill's case for more tightening, 0.8439 replaces 0.8262.
• The ECB lifts the deposit facility above 2.50% on December 17. That narrows the 150-basis-point premium on the euro leg even if Bank Rate stays at 4%.
• A weekly EUR/GBP close above 0.84720. The October 5 reference sits 1.4 pips above the 50% retracement at 0.8471, and a close through it gives back half the autumn decline.
• A UK CPI print at or below 3.0% before December 17. The November rise was argued from September CPI at 3.5% and a staff path near 5%.

What the December 17 decisions will settle

Both calendars name December 17, 2026, the BOE for Bank Rate and the minutes of the meeting ending December 16, the ECB for the press conference after a sitting on December 16. The shelf at 0.83358, resistance at 0.84028 and invalidation at 0.84720 are the levels against which 0.8262 is judged that evening. The same gap on another sterling cross is the Bank of England policy gap in sterling against the Singapore dollar.

TL;DR

EUR/GBP was 0.8334 at 06:49 UTC on November 6, 2026, 5.3 pips under the ECB reference of 0.83393 on November 5. Bank Rate is 4% and the deposit facility is 2.50%, a 150-basis-point premium after the rise from 3.75%. The base case is 0.8262 by December 17, a 127.2% extension of the decline from 0.86055 to 0.83358, if the premium stays put. The bear case is 0.8169 if Bank Rate rises again that day, and the bull case is 0.8439 if the minutes retire a further rise. A weekly close above 0.84720 invalidates the base case.

FAQ

What is the Bank Rate premium over the deposit facility?

The Bank Rate premium is Bank Rate minus the ECB deposit-facility rate. Bank Rate is 4% after the November 5, 2026 decision, and the deposit facility is 2.50%, in force since September 16 and unchanged on October 29. The gap is 150 basis points, 25 basis points wider than the 125-basis-point gap at a 3.75% Bank Rate.

Why is December 17 the horizon for EUR/GBP?

December 17, 2026 is the next monetary-policy date on both calendars. The BOE page says the next Bank Rate announcement is due that day. The ECB calendar lists December 16 and December 17, with the press conference on the second day. A change in either rate, or in the language on a further rise, would move the premium.

Where does the 0.8262 base target come from?

The 0.8262 figure is a 127.2% extension of the ECB reference range from 0.86055 on September 3, 2026 to 0.83358 on November 3, a span of 0.02697. Taking 27.2% of that span below the low gives 0.00734, and 0.83358 minus 0.00734 equals 0.82624, shown as 0.8262. It sits 72 pips under the November 6 composite of 0.8334 while the premium is still 150 basis points.

What would push EUR/GBP up to 0.8439?

The 0.8439 bull case is the 38.2% retracement of the September 3 to November 3 range, beside the October 14 ECB reference of 0.84385. It comes into view if the December 17 minutes treat November as a finished insurance step and the February survey median of 4.25% drops out. A higher deposit facility that day narrows the premium.

This article is informational analysis only and is not financial, investment, or trading advice. Foreign-exchange, commodity, and equity markets are highly volatile and can lose substantial value rapidly. Leveraged products carry total-loss risk and may exceed the initial margin posted. Past performance and historical correlations do not guarantee future results. Do your own research and consult a regulated financial adviser before making any investment decision.