- EUR/GBP remains in a tight range around 0.8550 as attention focuses on the BoE monetary policy announcement.
- The Euro struggles to extend the rise as the ECB is expected to announce rate cuts before the BoE.
- ECB member Yannis Stournaras forecasts three rate cuts this year.
EUR/GBP trades within Thursday's range in the European session on Friday. The cross is struggling to extend its three-day winning streak amid strong speculation that the European Central Bank (ECB) will begin cutting interest rates from its June meeting.
The ECB has yet to announce a victory over price pressures in the euro zone. However, ECB policymakers believe inflation is on track to return to the desired rate of 2%. ECB Chief Economist Philip Lane stated in a virtual conference at Stanford University that inflation has fallen at a faster rate than the ECB initially expected. However, he warned that the next phase of disinflation will be more gradual.
For the full year, investors expect the ECB to cut interest rates three times. Speculation of three rate cuts strengthened after ECB Governing Council member and Bank of Greece Governor Yannis Stournaras said in Friday's Asian session: “We now consider three rate cuts in 2024 as the scenario.” most likely,” Bloomberg reported.
Meanwhile, firm expectations of ECB rate cuts, combined with better-than-expected first-quarter Gross Domestic Product (GDP) figures, have improved the eurozone's economic outlook. Quantitative easing will result in a sharp increase in liquidity leakage into the economy as companies will be able to avail advances from commercial banks at lower interest rates.
In the UK, investors will focus on the Bank of England's (BoE) interest rate decision, which will be announced on May 9. The BoE is expected to keep interest rates at 5.25% for the sixth time in a row. Investors will therefore focus on new signals on when the BoE will start to lower interest rates. Traders consider the September meeting as the earliest date for the normalization of monetary policy.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
