During Thursday's early European session, EUR/GBP is trading in negative territory at 0.8450.
The Euro declines due to growing expectations of an additional rate cut by the ECB.
After February, the market anticipates one or two more rate cuts from the BOE.
During Thursday's early European trading hours, the EUR/GBP cross weakens to around 0.8450. The euro (EUR) is weighed against the pound sterling (GBP) by the dovish stance of European Central Bank (ECB) policymakers. Later on Thursday, the January preliminary reading of Eurozone Consumer Confidence will be made public.
Additional rate cuts were endorsed by ECB President Christine Lagarde, Yannis Stournaras, Francois Villeroy de Galhau, and Klaas Knot, members of the policymaking council. As a result, the shared currency may soon be threatened. On January 30, investors fully priced a reduction in the 3.0% deposit rate, and by the end of the year, they anticipate the benchmark to drop to 2.0%.
The ECB Earlier this week, Croatian central bank chief Boris Vujcic stated that risks related to the inflation outlook are generally balanced and that market expectations for interest rate cuts by the European Central Bank are reasonable. Christine Lagarde, the president of the European Central Bank, stressed on Wednesday that the central bank will continue to lower interest rates gradually and is "not overly concerned" about the risk of inflation from overseas.
Regarding the GBP, investors expect the Bank of England (BoE) to lower its main interest rate by 25 basis points (bps) to 4.5% on February 6. According to Reuters polling of economists, the market expects one or two more rate cuts after February, and the BoE is expected to cut its rate three times this year. According to Capital Economics analysts, "we still think the Bank of England will cut interest rates at the next meeting in February, from 4.75% to 4.50%, and continue to cut rates gradually thereafter."
The Euro declines due to growing expectations of an additional rate cut by the ECB.
After February, the market anticipates one or two more rate cuts from the BOE.
During Thursday's early European trading hours, the EUR/GBP cross weakens to around 0.8450. The euro (EUR) is weighed against the pound sterling (GBP) by the dovish stance of European Central Bank (ECB) policymakers. Later on Thursday, the January preliminary reading of Eurozone Consumer Confidence will be made public.
Additional rate cuts were endorsed by ECB President Christine Lagarde, Yannis Stournaras, Francois Villeroy de Galhau, and Klaas Knot, members of the policymaking council. As a result, the shared currency may soon be threatened. On January 30, investors fully priced a reduction in the 3.0% deposit rate, and by the end of the year, they anticipate the benchmark to drop to 2.0%.
The ECB Earlier this week, Croatian central bank chief Boris Vujcic stated that risks related to the inflation outlook are generally balanced and that market expectations for interest rate cuts by the European Central Bank are reasonable. Christine Lagarde, the president of the European Central Bank, stressed on Wednesday that the central bank will continue to lower interest rates gradually and is "not overly concerned" about the risk of inflation from overseas.
Regarding the GBP, investors expect the Bank of England (BoE) to lower its main interest rate by 25 basis points (bps) to 4.5% on February 6. According to Reuters polling of economists, the market expects one or two more rate cuts after February, and the BoE is expected to cut its rate three times this year. According to Capital Economics analysts, "we still think the Bank of England will cut interest rates at the next meeting in February, from 4.75% to 4.50%, and continue to cut rates gradually thereafter."
