Eurgbp Turns Higher

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Eurgbp Turns Higher

Eur/Gbp Turns Higher To 0.8400 On Hawkish Ecb

EUR/GBP has been trading in green for the 2nd session in a row & is seen near the 0.8400 handle on Tuesday. Despite the recent bullish trend, the EUR/GBP is still very close to 0.8386, one of the lowest levels in the last 2 years.

For now, the Euro is supported by the hawkish expectations from the European Central Bank (ECB). The central bank is expected to keep the refinancing rate unchanged at 4.25% at Thursday's meeting.

Ecb Expected To Maintain Rates

In June, the ECB lowered the rate cut, which was one of the first such instances since 2019. Before that, the ECB didn't change the interest rate for 9 months. According to experts, the next rate cuts from the ECB will be done on September and then on December 2024.

If we look at the UK's side, the financial markets of the UK are preferred by investors over the EU and the USA. Both of these markets (USA & EU) are under pressure due to political uncertainties. Especially the recent general elections in the UK have removed a great deal of political and financial uncertainty from the UK's markets.

The overall sentiment supports the GBP against the EUR and the USA. That's why if we ignore the recent short-term bullish trend in the EUR/GBP, the medium to long-term trend still favors the GBP.

Additionally, there's also a great deal of uncertainty regarding the time of rate cuts from the BoE (Bank of England). Many traders believe that the rate cuts will start in August, but there's still no official confirmation.

However, the data released on Wednesday will shed light on how the BoE will approach any adjustments to its monetary policy.

The CPI (y/y) in the UK will likely be near the 2% target of BoE, while the core inflation will likely decline to 3.4%. Similarly, the retail price index (UK) will also go down, making it the 4th such instance in the last five months.

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