The EUR/GBP pair remains steady around 0.8540 as investors pause ahead of pivotal PMI data releases from both the Eurozone and the United Kingdom. ECB officials approach rate-cut decisions cautiously amid concerns over inflation, while the Pound Sterling gains traction on expectations of unchanged rates by the Bank of England.
During the early European session on Wednesday, the EUR/GBP cross struggles to extend its recent gains. Traders anticipate gradual interest rate reductions by the ECB, but officials hesitate to commit to a specific timeline due to fears of potential inflation rebounds.
Yesterday, the EMU’s HICP data showed no month-on-month change in July, in line with expectations. Conversely, the UK’s Public Sector Net Borrowing surged to £3.1 billion, surpassing market forecasts and highlighting economic challenges in the region.
Recent UK inflation and employment reports have strengthened the case for the BoE to maintain its 5.0% interest rate at the upcoming September meeting. Chief Economist Rupert Thompson predicts a delay in the next rate cut until November, supporting the Pound Sterling further.
Investors eagerly await Thursday’s PMI data releases from the UK, Eurozone, and Germany, which could provide crucial insights into economic conditions and impact central bank policies. Traders should closely monitor these reports for potential market movements and trading opportunities.