EUR/GBP drops below 0.8350 due to less likelihood of a BoE rate cut next month

• EUR/GBP remains subdued as Pound Sterling receives support from the hawkish mood surrounding the BoE policy decision in December.
• BoE Deputy Governor Lombardelli requires more evidence of easing price pressures before supporting another rate cut.
• The Euro struggles as the ECB could deliver a rate cut in December amid growing concerns about Eurozone's economic outlook.

EUR/GBP extends its losses for the second successive session, trading around 0.8330 during the early European hours on Wednesday. This downside of the EUR/GBP cross could be attributed to improved Pound Sterling (GBP) amid reduced expectations of the Bank of England (BoE) cutting interest rates in December.

Most BoE policymakers favor a gradual approach to easing monetary policy. BoE Deputy Governor Clare Lombardelli stated on Tuesday that she would require additional evidence of easing price pressures before supporting another interest rate cut. US trade tariffs could threaten economic growth, though it remains too early to assess the full impact of the proposed measures, Lombardelli added.

In contrast, Eurozone markets have fully priced in a 25-basis-point rate cut by the European Central Bank (ECB) in December, with the probability of a larger 50 bps cut rising to 58%. This reflects growing market concerns about the region's economic prospects. 

Meanwhile, US President-elect Donald Trump's renewed tariff threats against China, Mexico, and Canada have further dampened market sentiment, adding downward pressure on European economies and weighing on the risk-sensitive Euro.

Traders are now focused on the upcoming release of the Eurozone Harmonized Index of Consumer Prices (HICP) inflation data on Friday. Preliminary inflation and core inflation figures for November are expected to show annualized increases, potentially raising concerns for investors. Moreover, Bank of England’s Financial Stability Report will also be eyed.