

Market Analysis
EUR/GBP's upward momentum, initiated on March 29, persisted into Thursday's European trading session, nearing the 0.8570 mark. The recent alleviation of global inflationary pressures has sparked discussions about potential interest rate adjustments by central banks.
Traders in money market futures are predicting a 25 basis point reduction in interest rates by the Bank of England (BoE) come June, with the likelihood currently at 66%. Similarly, in the Eurozone, the annual inflation rate experienced a greater-than-expected decline in March, leading to speculation about a possible interest rate cut by the European Central Bank (ECB) in June.
March's Eurozone Harmonized Index of Consumer Prices (HICP) revealed a year-on-year increase of 2.4%, falling short of the anticipated 2.6% rise.
BoE Governor Andrew Bailey recently suggested that as indications of a cooling inflationary trend persist, the UK economy might reach a juncture where the central bank could contemplate rate reductions. ECB policymaker Pablo Hernandez de Cos, while refraining from making explicit forecasts regarding monetary policy, indicated that recent inflation figures align with the central bank's objective of meeting its inflation target.
Hernandez also hinted at the possibility of the ECB implementing interest rate cuts in June, citing a prolonged deceleration in inflation across the Eurozone. Additionally, ECB policymaker Robert Holzmann suggested that the central bank could opt for rate cuts in June, considering the potential for a more rapid decline in inflation than initially anticipated.
Paraphrasing text from "FX Street" all rights reserved by the original author.