The EUR/GBP pair is recovering from recent losses, trading around 0.8340 during Friday’s Asian session. However, further advances may be constrained as the Euro’s performance against major currencies remains weak. This weakness is fueled by rising speculation that the European Central Bank (ECB) could lower the Deposit Facility Rate for the second consecutive month next month, marking the ECB’s third dovish move of the year.
ECB Chief Economist Philip Lane is set to deliver the opening remarks at a conference in Dublin, Ireland, focused on Fiscal Policy, Financial Sector Policy, and Economic Growth. Additionally, ECB board member Piero Cipollone will give a keynote speech at the “Economics of Payments XIII” conference organized by the Austrian Central Bank.
A report from Reuters indicates that economists at HSBC expect the ECB to reduce interest rates by 25 basis points at each meeting from October through April. Societe Generale economist Anatoli Annenkov has also suggested a case for front-loading rate cuts, advocating for a more aggressive approach early in the easing cycle.
On the other hand, expectations that the Bank of England‘s (BoE) rate-cutting cycle will proceed more cautiously than the ECB’s are likely to bolster the British Pound (GBP) and apply downward pressure on the EUR/GBP pair.
In related developments, the BoE allocated £37.059 billion ($49.52 billion) in seven-day funds during its weekly short-term repo on Thursday, a decrease from last week’s record allocation of £44.523 billion. These repos, or repurchase agreements, allow banks to temporarily exchange government bonds for central bank cash, helping maintain market interest rates in line with the BoE’s policy rate, according to Reuters.
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