The EUR/GBP pair is on a losing streak for the third day in a row, currently trading around 0.8570. This is due to growing expectations that the Bank of England (BoE) will delay rate cuts, as indicated by a Reuters poll. The UK 10-year yield has increased, leading to hawkish expectations for the BoE’s monetary policy stance.
ECB’s Schnabel mentioned that achieving Eurozone inflation of 2% could be challenging. The Pound Sterling is receiving support as the market anticipates that the BoE will likely hold off on lowering borrowing costs until the next quarter.
Bank of England Chief Economist Huw Pill stated that interest rate cuts are still some way off, despite the passage of time bringing them closer. The UK 10-year Gilt yield is near five-month highs at 4.31%, reinforcing expectations for the BoE’s stance.
The ECB is planning to lower interest rates this year, with ECB President Christine Lagarde suggesting a potential decrease in the deposit rate in June. ECB board member Isabel Schnabel highlighted challenges in reaching the inflation target, particularly in services inflation.
German Consumer Confidence Survey for May showed improvement, with expectations of better consumer sentiment in the coming months. UK Consumer Confidence data is set to be released on Friday, with a slight improvement expected for April.