EUR/GBP advances to 0.8630 as BoE Ramsden comments rekindle rate cut hopes

• EUR/GBP moves higher as weak inflation outlook raises prospects for early BoE rate cut.
• BoE's Dave Ramsden believes inflation will remain below the BoE's latest forecasts.
• Villeroy de Galhau of the ECB is comfortable with the possibility that the central bank will choose to cut rates from June.

The EUR/GBP pair rises to 0.8630 in the European session on Monday. The cross rises as investors expect Bank of England Deputy Governor Dave Ramsden to join Swati Dhingra and vote for a rate cut at the next monetary policy meeting on May 9.

On Friday, Dave Ramsden commented that the risks of persistent UK inflation have receded and he expects price pressures to remain below the BoE's latest inflation forecasts. Ramsden added that he sees inflation remaining around the BoE's 2% target over the next three years and hopes it will not rise again as expected by the end of this year.

The BoE's Ramsden's weak inflation forecasts have triggered expectations of an early rate cut. Traders have discarded bets that the BoE would cut rates in November and now expect them from August. The impact is visible in the behavior of the Pound Sterling against the Euro.

Looking ahead, investors will focus on preliminary UK S&P Global/CIPS PMI data for April, due out on Tuesday. The services PMI is estimated to have fallen slightly to 53.0 from 53.1. Regarding the manufacturing PMI, a stable expansion is expected at 50.3 points.

Meanwhile, the Euro will remain in suspense, as investors see an imminent rate cut by the European Central Bank (ECB). The ECB is expected to cut interest rates three times this year as eurozone inflation has softened considerably and the economic outlook is weak.

Expectations that the ECB will cut rates from June remain firm, as French central bank chief and ECB policymaker Villeroy de Galhau said on Thursday that they could cut rates at the next meeting, unless capital surprise. Villeroy emphasized returning to structural transformation, since inflation is receding.