EUR/GBP Climbs Near 0.8570 After Recovering Losses, Awaits UK and Eurozone PMI

EUR/GBP Moves Upward to Nearly 0.8570 After Recovering Losses, Awaits UK and Eurozone PMI Data

During the Asian trading session on Thursday, EUR/GBP sees an increase, reaching around 0.8570. This rise comes after Swati Dhingra, a Bank of England (BoE) member, advocated for interest rate cuts, warning that delaying them could lead to higher living costs and a potential economic downturn in the UK. Dhingra reiterated her stance in favor of rate cuts.

BoE Governor Andrew Bailey recently addressed the UK Parliament, noting a rapid decline in UK inflation. He stressed that the central bank doesn’t require inflation to fully return to target levels before considering rate cuts. Additionally, BoE Deputy Governor Ben Broadbent pointed out that wage growth and services inflation are both above the rate, indicating alignment with sustainable inflation at 2%.

The Euro has faced some pressure, possibly due to market caution amid reduced expectations of early interest rate cuts globally. However, China’s decision to decrease its five-year Loan Prime Rate (LPR) by 25 basis points (bps) to support its economy could provide some backing for the Euro, given the Eurozone’s exports to China.

In other news, the ECB Current Account improved in December compared to the previous month, and ECB Negotiated Wage Rates (QoQ) rose in Q4 2023. ECB President Christine Lagarde has highlighted wages as “an increasingly important driver of inflation dynamics in the coming quarters.”

Traders are gearing up for potential volatility as they await the release of Purchasing Managers Index (PMI) data from both the Eurozone and the United Kingdom on Thursday.

EUR/GBP: ADDITIONAL IMPORTANT LEVELS