In the early European session on Thursday, EUR/GBP softens to about 0.8620.
Lagarde of the ECB downplayed concerns over second-round inflation.
Concerns about the political risks in the UK led to the resignation of UK Prime Minister Keir Starmer on Monday.
During Thursday's early European trading hours, the EUR/GBP cross falls to about 0.8620. Policymakers of the European Central Bank (ECB) have made dovish remarks that have affected the Euro (EUR) versus the British Pound (GBP). The ECB's Piero Cipollone and Philip Lane's comments later on Thursday are anticipated by traders for new motivation.
At its June policy meeting, the ECB increased its deposit rate by 25 basis points (bps) to 2.25%. However, ECB President Christine Lagarde gave a more dovish message, stating that the central bank does not need to react forcefully to the spillovers of the Middle East war.
Lagarde went on to say that while the Eurozone's inflation shock is too big to ignore, it is not yet significant enough to raise inflation over the long run. The EUR is weakened as markets reduce their bets on further ECB hikes. One or two more raises have been priced in by financial markets, and by the end of this year, the next step will be fully priced in.
However, political unrest in the UK could cause the GBP to decline and provide as a tailwind for the cross. On Monday, UK Prime Minister Keir Starmer tendered his resignation, plunging the nation into yet another political crisis. After Andy Burnham won the Makerfield by-election last week, Starmer resigned under tremendous pressure. Now, his Labour Party will have to choose a new leader to guide the nation.
Lagarde of the ECB downplayed concerns over second-round inflation.
Concerns about the political risks in the UK led to the resignation of UK Prime Minister Keir Starmer on Monday.
During Thursday's early European trading hours, the EUR/GBP cross falls to about 0.8620. Policymakers of the European Central Bank (ECB) have made dovish remarks that have affected the Euro (EUR) versus the British Pound (GBP). The ECB's Piero Cipollone and Philip Lane's comments later on Thursday are anticipated by traders for new motivation.
At its June policy meeting, the ECB increased its deposit rate by 25 basis points (bps) to 2.25%. However, ECB President Christine Lagarde gave a more dovish message, stating that the central bank does not need to react forcefully to the spillovers of the Middle East war.
Lagarde went on to say that while the Eurozone's inflation shock is too big to ignore, it is not yet significant enough to raise inflation over the long run. The EUR is weakened as markets reduce their bets on further ECB hikes. One or two more raises have been priced in by financial markets, and by the end of this year, the next step will be fully priced in.
However, political unrest in the UK could cause the GBP to decline and provide as a tailwind for the cross. On Monday, UK Prime Minister Keir Starmer tendered his resignation, plunging the nation into yet another political crisis. After Andy Burnham won the Makerfield by-election last week, Starmer resigned under tremendous pressure. Now, his Labour Party will have to choose a new leader to guide the nation.
