

Market Analysis
The EUR/GBP cross recovers to 0.8440 during the early European session on Friday as the Pound Sterling (GBP) edges lower amid growing expectations of an interest rate cut by the Bank of England (BoE) next week.
Investors are betting on a 45% probability of a 25 basis point rate cut by the BoE at its policy meeting on August 1. UBS analysts predict the BoE will implement the first 25 basis point cut in early August, followed by another 25 basis points in November, reducing the interest rate to 4.75% by the end of 2024. "The key reason we expect the MPC to cut rates is the recent data," stated UBS analysts.
Conversely, declining business confidence in France and Germany has increased the likelihood of the European Central Bank (ECB) cutting interest rates in September, with warnings that the Eurozone's two largest economies are on the brink of an economic downturn. On Thursday, the German IFO Institute reported a drop in business confidence from 88.6 in June to 87 in July, the lowest level since February and below economists’ forecasts of 88.9.
Market participants will be closely watching the preliminary Eurozone Gross Domestic Product (GDP) figures for the second quarter (Q2). The quarterly Eurozone GDP is expected to grow by 0.2% QoQ in Q2, compared to the previous reading of 0.3% QoQ.
Paraphrasing text from "FX Street" all rights reserved by the original author.