Market Analysis

EUR/GBP is continuing its upward trend, trading near 0.8460 during today's European session, marking the third consecutive day of gains. The British Pound (GBP) remains under pressure following the Bank of England's (BoE) recent cautious stance, which has heightened expectations for a potential interest rate cut at the BoE's August meeting.

According to ING’s FX Strategist Francesco Pesole, the BoE's statement last Thursday indicated a growing inclination towards rate cuts, with ING forecasting three cuts in 2024 starting from August, a more dovish outlook compared to the market's current expectation of two cuts.

Furthermore, Friday's release of flash UK PMIs revealed a slower expansion in private sector business activity in June, the weakest since November last year, further weighing on the Pound and supporting the EUR/GBP pair.

However, the EUR/GBP's upside potential may be capped by uncertainties surrounding France's snap election outcome, which could impact the Eurozone's economic stability. Meanwhile, today's German IFO Business Climate Index for June showed a slight decline to 88.6 from 89.3 in May, below the market forecast of 89.7. This weaker-than-expected data from Germany might add pressure on the Euro, thereby restraining further gains in the EUR/GBP cross.

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Paraphrasing text from "FX Street" all rights reserved by the original author.