The EUR/GBP cross saw some buying interest during the Asian session on Monday, though the movement remained lackluster and the pair continued to hover just below a nearly three-week low of 0.8510, reached on Friday. As of now, spot prices are trading just below the mid-0.8500s, reflecting a modest daily gain of less than 0.10%.
The British Pound’s underperformance against the Euro is largely attributed to recent comments from UK Finance Minister Rachel Reeves. Reeves stated that the British government is not in a hurry to secure a trade deal with the United States, which has added to the pressure on the GBP and supported the EUR/GBP cross. While investors remain optimistic about the UK eventually reaching a trade agreement with the US, uncertainty over the timing of such a deal is weighing on the Pound.
Additionally, UK retail sales showed an unexpected rise of 0.4% in March, following a downward revision of the previous month’s growth to 0.7%. This better-than-expected retail performance, combined with the expectation that the Bank of England (BoE) will slow the pace of interest rate cuts compared to other central banks like the European Central Bank (ECB), could help cushion the GBP’s losses and cap further gains for EUR/GBP.
The ECB, which had previously cautioned that US tariffs could significantly harm economic growth, continues to be seen as likely to ease policy further in the coming months. This economic outlook casts a shadow on the EUR/GBP cross, suggesting that traders should remain cautious before committing to fresh bullish positions. The recent corrective pullback from the 0.8735-0.8740 region, the highest point since November 2023, suggests that the upside for the pair could be limited in the short term.
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