Eurgbp Drops On Political Uncertainty

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Eurgbp Drops On Political Uncertainty

Eur/Gbp Drops Near 0.8400 On Political Uncertainty

EUR/GBP is at risk of more downside as it trades near the 0.8400 support level. It appears that the EUR is under pressure due to the political uncertainty related to the French Elections.

This uncertainty has allowed the Pound Sterling to stay firm against its European counterpart. At the same time, there are rumors that the Bank of England will delay the rate cuts.

The announcement of snap elections in France took everyone by surprise, and this shock is what we are seeing in the EUR/GBP cross.

Ecb To Deliver Next Rate Cut By Year End

The bottom line is that EUR is having a hard time maintaining its ground against the GBP. This is despite the fact that the ECB is highly likely to delay the rate cuts.

Just a week ago, the ECB started its rate cut campaign with a 25 bps rate cut. This marks the first time in almost 5-years that the central bank has taken any such action. However when it comes to the timing of future rate cuts, the bank remains hesitant.

According to experts, the Bank of England (BoE) will likely announce its next rate cut by the end of the year. So, as far as rate differential is concerned, the EUR will likely remain supported for the rest of 2024.

On the UK's side, the interest rate will likely remain unchanged as the wage growth is still pretty stable. The recently released UK labor market showed that the average earnings (without bonuses) showed growth consistent with the forecasts.

key reason for the uptick in service inflation is wage growth, which remains a key hindrance for the BoE to cut the policy rate and return back to normalization.

look at the number of employed people continues to show a decline for the 4th time. It appears that the weak household spending is preventing the firms from hiring more people.

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