Eurgbp Trades Lower On Weak Sentiment

 Eurgbp Trades Lower On Weak Sentiment

Eur/Gbp Trades Near 0.8600, Ends Its Winning Streak

EUR/GBP closed two days in green only to turn red during Thursday's trading session. The EUR/GBP can be seen near the 0.8600 handle after moving lower from the daily high near 0.8620.

According to the Vice President of the ECB, the EU countries likely experienced a recession during the previous quarter. Another member of the ECB said that the policy measures it took are enough to curb inflation.

In addition, the increased geopolitical tensions have also increased the chances of higher inflation in the coming months. Similarly, another policymaker from the ECB hinted at early rate cuts and added that they could be done before May 2024.

Rate Cuts Expected In March/April

If we look at the market, the perception is that rate cuts are a certainty in 2024. The first-rate cut from the ECB could also come in March/April. Similar actions from the BoE are expected, which leads us to another question.

Which bank's policy of rate cuts will be more aggressive? That question will send the EUR/GBP lower or towards the following resistance levels.

In the UK, the central bank focuses on inflation, as the 2% target still needs to be reached. According to Andrew Bailey, the unemployment rate remains the same, which means the bank can maintain the current policy. He also added that the household income in the UK has also increased, which will drive consumer demand.

Upcoming economic data includes the industrial output from Italy and Spain, due in the next few days. After that, the UK manufacturing production, along with the UK GDP numbers for November, are also due.

If the European Central Bank takes a more hawkish stance, it will lower the EUR/GBP. Similarly, a hawkish stance from the Bank of England will be GBP positive, which means a bearish EUR/GBP.

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