

Market Analysis
The EUR/GBP pair continues its decline, trading in negative territory for the seventh consecutive day, hovering around 0.8415 during the early European session on Thursday. The Euro (EUR) remains under pressure against the Pound Sterling (GBP) amid increasing expectations that the European Central Bank (ECB) will implement another interest rate cut in its September meeting.
ECB Governing Council member Klaas Knot mentioned on Wednesday that he is waiting for further data before deciding on whether to back an interest rate reduction in September. However, market participants widely anticipate that the ECB will lower borrowing costs next month due to easing inflationary pressures and an uncertain economic outlook.
The flash estimate for the Eurozone's Harmonized Index of Consumer Prices (HICP) is set to be released on Friday. Headline inflation is projected to decrease to 2.2% year-over-year in August, down from the previous 2.6%, while core CPI inflation is expected to slip to 2.8% year-over-year from 2.9% in the last reading. Should the data come in stronger than expected, it could provide support for the Euro and limit the EUR/GBP downside.
Conversely, the GBP remains bolstered by stronger-than-expected economic data in recent months and optimism surrounding the new Labour government. Bank of England (BoE) Governor Andrew Bailey's comments also support the GBP, as he emphasized the need for a restrictive policy stance to ensure inflation risks remain under control. Economists, according to a Reuters poll, predict the BoE may implement one more 25 basis point rate cut this year.
Paraphrasing text from "FX Street" all rights reserved by the original author.