CFD Trading Rate Euro vs Great Britain Pound (EURGBP)

• EUR/GBP gains sharply to near 0.8260 after the BoE holds interest rates steady at 4.75%, as expected, with a 6-3 vote split.
• BoE Bailey refrained from committing a pre-defined rate cut path.
• The Euro performs strongly despite ECB officials guiding more interest rate cuts.

The EUR/GBP pair climbs to near 0.8260 in Thursday’s North American session. The cross gains after the Bank of England’s (BoE) monetary policy announcement in which it leaves interest rates unchanged at 4.75%.

The BoE was already expected to hold its key borrowing rates steady. However, the vote split came in at 6-3 against 8-1, which suggested that more policymakers were in favor of cutting interest rates. The scenario resulted in selling pressure on the Pound Sterling (GBP). BoE external Monetary Policy Committee (MPC) members Swati Dhingra and Alan Taylor, and Deputy Governor Dave Ramsden proposed a 25-basis points (bps) interest rate reduction.

A majority of BoE officials voted for leaving interest rates steady as United Kingdom (UK) price pressures have accelerated in the past two months amid strong wage growth.

BoE Governor Andrew Bailey refrained from guiding the likely interest rate cuts next year. “Due to heightened uncertainty in the economy, we can't commit to when or by how much we will cut rates in 2025,” he said.

Going forward, investors will focus on the UK Retail Sales data for November, which will be released on Friday. On a monthly basis, UK Retail Sales are estimated to have grown by 0.5% after a 0.7% decline in October.

Meanwhile, the Euro (EUR) outperforms its major peers on Thursday even though European Central Bank (ECB) officials guide further policy easing in 2025. ECB policymakers support more interest rate cuts as Eurozone inflation is broadly under control and potential risks to economic growth have increased due to incoming tariff policies by United States (US) President-elect Donald Trump.

The latest macro indicators have all but reinforced expectations that the Bank of England (BoE) will keep rates on hold on Thursday. In this context, the EUR/GBP pair is set to stay capped below 0.8300 in the coming weeks, ING’s FX analyst Francesco Pesole notes.

EUR/GBP to stay capped below 0.8300 in near term

“The focus will be on any tweaks to forward-looking language and the vote split (which we expect at 8-1 hold-cut). There is no press conference scheduled for this meeting. Our perception is that the BoE will try to make this announcement a non-event, offering cautious signals for further easing down the road but still highlighting stickiness in services inflation and wages.”

“We don’t see the pound being hugely impacted today, and the near-term outlook remains positive for the currency – at least until a fresh round of UK data potentially throws the latest hawkish repricing into question.”

“We see EUR/GBP staying capped below 0.8300 in the coming weeks.”

• EUR/GBP gains ground following the improved GfK Consumer Confidence Survey from Germany.
• The Euro may struggle due to rising odds of the ECB reducing rates at every meeting until June 2025.
• The Pound Sterling may appreciate as traders expect the BoE to keep rates unchanged on Thursday.

EUR/GBP halts its three-day losing streak, trading around 0.8250 during the early European hours on Thursday. The EUR/GBP cross remains in positive territory after the release of Germany's GfK Consumer Confidence Survey, which improved to -21.3 for January, up from the previously revised -23.1. The index was expected to come in at -22.5.

The upside of the EUR/GBP cross could be limited as the Euro receives downward pressure from the rising odds that the European Central Bank (ECB) will reduce interest rates at every meeting until June 2025. This sentiment is bolstered by policymakers' concerns over mounting economic risks in the Eurozone.

Speaking at the Annual Economics Conference, ECB President Christine Lagarde signaled the central bank’s readiness to implement additional rate cuts if incoming data confirms that disinflation remains on course. Lagarde also remarked that the earlier emphasis on maintaining "sufficiently restrictive" rates is no longer justified.

Additionally, the EUR/GBP cross may face challenges as the Pound Sterling (GBP) appreciates due to the increased likelihood of the Bank of England (BoE) keeping interest rates unchanged later in the day while remaining focused on addressing elevated domestic inflation.

On Wednesday, data showed that the UK Consumer Price Index (CPI) increased by 2.6% year-over-year in November following October’s 2.3% growth. Core CPI, excluding volatile food and energy items, rose 3.5% YoY in November, against its previous rise of 3.3%. Meanwhile, the annual services inflation steadied at 5.0%, below forecasts of 5.1% but above the BoE's estimate of 4.9%.

• The Euro turns negative on the day weighed by dovish comments by ECB officials.
• ECB's Lane and Wunsch have hinted to more rate cuts in 2025.
• The BoE is expected to keep a less dovish outlook amid a resilient UK economy and higher inflationary trends.

The Euro has given away previous gains and is practically unchanged on the daily chart as ECB speakers, Lane and Wunsch have hinted at further rate cuts by the European Central Bank.

ECB’s Chief Economist Philip Lane refused to pre-commit to any particular rate path but remained confident that inflation is coming to track, while financing conditions remain restrictive.

In a more straightforward language, ECB committee member, Pierre Wunsch has signaled four more interest rate cuts to a terminal rate of about 2%.

The BoE will target a higher terminal rate

These comments confirm the market view that the European Central Bank will cut interest rates more aggressively than the Bank of England. The weak economic outlook in the region and the uncertain political scenario in Germany and France are pressuring the ECB to ease borrowing costs to stimulate economic growth.

In the UK, on the other hand, the economy is showing a more encouraging outlook. Employment grew beyond expectations with wages surging in the three months to October, Inflation picked up in November, also if the acceleration of the core CPI failed to meet expectations.

In this context, the BoE is expected to keep its Bank Rate on hold at the current 4.75% level on Thursday. The market is expecting between two and three rate cuts next year, a slower pace of monetary easing which is likely to favour the Pound against the Common Currency.

 

• EUR/GBP gathers strength to around 0.8275 in Wednesday’s early European session, adding 0.27% on the day. 
• The UK annual CPI jumped 2.6% in November vs. 2.6% expected. 
• ECB President Christine Lagarde hinted at potential rate cuts as inflation risks ease. 

The EUR/GBP cross holds positive ground near 0.8275, snapping the two-day losing streak during the early European session on Wednesday. The Pound Sterling (GBP) weakens after the UK November Consumer Price Index (CPI) inflation data. Later on Wednesday, traders will keep an eye on the Eurozone Harmonized Index of Consumer Prices (HICP) report. 

Data released by the Office for National Statistics (ONS) on Wednesday showed that the UK CPI rose by 2.6% YoY in November, compared to a 2.3% growth seen in October. The reading was in line with the market consensus of 2.6% and stayed well above the Bank of England’s (BoE) 2.0% target. 

Meanwhile, the Core CPI, excluding volatile food and energy items, climbed by 3.5% YoY in November versus a 3.3% increase in October, missing the estimation of 3.6%. On a monthly basis, the UK CPI inflation eased to 0.1% in November from 0.6% in October. The markets expect a 0.1% print in the reported month. The UK inflation report failed to boost the GBP and acts as a tailwind for EUR/GBP. 

The European Central Bank (ECB) lowered its key rates last week for the fourth time this year and signaled for further rate cuts as inflation risks ease. During the press conference, the ECB President Christine Lagarde said, “The direction of travel is clear, and we expect to lower interest rates further.” The dovish remarks from the ECB policymakers might weigh on the Euro (EUR) against the GBP. Furthermore, the concerns about the weak economy and uncertainty about potential tariffs in the US could contribute to the shared currency’s downside. 

UK labour statistics published this morning are generally quite hawkish for Bank of England expectations, and are leading to a stronger Pound Sterling (GBP), ING’s FX analyst Francesco Pesole notes.

Hot wage data to keep EUR/GBP pressured

“Headline 3M/3M employment slowed only modestly to 173k in October, against expectations for only 5k. That is, however, an unrealiable measure and may be ignored. The same is true for the unemployment rate, which remained at 4.3%.”

What is really important for the Bank of England is the surprise acceleration in wages. Both headline weekly earnings and the ex-bonus measure accelerated again above 5.0%. Crucially, this acceleration is all concentrated in the private sector (where wages grew 12% on a month-on-month annualised basis), where pay trends are more intrinsically linked to wider economic trends.”

“There are still indications that the jobs market market is cooling – e.g., lower vacancies than pre-Covid – but clearly today’s data is offering a reason for hawks to get louder in the MPC. Ultimately, there is a compelling case for EUR/GBP to stay below 0.830 in the near term, with risks still skewed to the downside as the BoE will highly likely stay on hold this week, highlighting the striking policy divergence with a dovish ECB.”

• EUR/GBP depreciates after the release of the UK employment report.
• The UK ILO Unemployment Rate remained unchanged at 4.3% in the three months to October, as expected.
• ECB President Lagarde indicated that the central bank is prepared to cut rates further if disinflation remains on track.

EUR/GBP extends its losses for the second successive session, trading around 0.8260 during the early European hours on Tuesday. The EUR/GBP cross faces challenges as the Pound Sterling (GBP) recovers its losses after the release of UK jobs data.

The UK ILO Unemployment Rate stayed unchanged at 4.3% in the three months to October, the data published by the Office for National Statistics (ONS) showed on Tuesday. The reading matched the market estimate of 4.3% in the reported period. Meanwhile, Employment Change reported the number of employed individuals rose by 173,000, against the previous 253,000 increase. Moreover, Claimant Count Change reported 0.3K jobless benefits claims for November, drastically lower than the expected 28.2K.

Traders will shift their focus toward the Consumer Price Index (CPI) inflation figures on Wednesday, ahead of the Bank of England's (BoE) rate decision on Thursday. The BoE is widely expected to maintain interest rates, with an anticipated eight-to-one vote split, as one notably dovish policymaker is likely to support a rate cut.

On Monday, ECB President Christine Lagarde spoke at the Annual Economics Conference, indicating that the ECB is prepared to cut rates further if incoming data confirm that disinflation remains on track. Lagarde also signaled a shift in policy stance, noting that the previous bias toward maintaining "sufficiently restrictive" rates is no longer warranted.

Data showed on Monday that Eurozone PMI figures exceeded expectations in December; however, Services PMI surveys remain in contraction territory amid growing concerns about a deepening economic slowdown in Europe, which continues to weigh on investor and business sentiment. Traders are expected to focus on mid-tier German data, including December's Business Climate and Current Assessment reports from the CESifo Group.

• EUR/GBP holds its position ahead of PMI data from both economies.
• ECB President Lagarde indicated that the central bank is prepared to cut rates further if disinflation remains on track.
• The BoE is anticipated to take a cautious and gradual approach to easing monetary policy.

EUR/GBP moves sideways following two days of gains, trading around 0.8320 during the European hours on Monday. Traders are awaiting Purchasing Managers Index (PMI) data from both economies to gauge private business activities for both the manufacturing and services sectors.

On Monday, ECB President Christine Lagarde spoke at the Annual Economics Conference, indicating that the ECB is prepared to cut rates further if incoming data confirm that disinflation remains on track. Lagarde also signaled a shift in policy stance, noting that the previous bias toward maintaining "sufficiently restrictive" rates is no longer warranted.

The EUR/GBP cross gained ground as the Euro received support following President Emmanuel Macron's appointment of centrist ally François Bayrou as France's Prime Minister, raising hopes for political stability. Macron had pledged to swiftly select a new candidate after Michel Barnier was forced to resign following a confidence vote in Parliament.

Moreover, European Central Bank (ECB) Governing Council member Robert Holzmann said on Friday that cutting interest rates solely to stimulate the economy would be a mistake. According to Holzmann, the ECB’s primary responsibility is to ensure price stability, not to fuel economic growth. "Lowering rates now to boost the economy would contradict our current stance," he said, as reported by Bloomberg.

The upside of the EUR/GBP cross could be limited as the Pound Sterling (GBP) may appreciate due to the increased likelihood of the Bank of England (BoE) adopting a gradual pace of policy easing compared to other central banks in Europe and North America. The BoE and other forecasting bodies expect that inflation will rise next year in the wake of UK finance minister Rachel Reeves' big-spending budget. However, BoE Governor Andrew Bailey indicated four interest rate cuts in 2025, which could limit the upside of the British Pound (GBP) and support the EUR/GBP cross.

The usual leaks that follow ECB rate decisions emerged yesterday to suggest that policymakers are leaning towards 25bps cuts in January and March at this point. Markets have priced in a bit more easing risk; swaps reflect 69bps of anticipated easing through March, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR is trading soft

“ECB Governor Villeroy—a dove—went further, stating that lower rates were coming and that policymakers were comfortable with market pricing (of more than 100bps of easing anticipated for the year). The Bundesbank’s latest forecast anticipates virtually no growth (0.2%) in Germany next year. Despite a mild rebound from the intraday low, with the help of short-covering on the crosses, the outlook for the EUR looks pretty bleak.”

“Intraday gains are providing some, potentially bullish, respite for the EUR, with an outside range higher developing around the intraday low. Gains may prove to be short-lived and minor bear trend channel resistance at 1.0505 is yet to be tested. A push above here is needed to drive a little more strength in the short run.”

“Broader technical trends are EUR-bearish though and a net loss on the week for the EUR remains likely—which would heap technical misery on the EUR after last week’s failure to hold above 1.06. I doubt any pickup in the EUR will extend much beyond the mid-1.05s.”

• The Euro bounces up from two-year lows with the GBP tumbling after weak UK data.
• UK GDP contracted for the second consecutive month in November.
• The diverging forward guidance of the ECB and the BoE has kept the Euro vulnerable.

The Euro is rallying for the second consecutive day on Friday and approaches the 0.8300 level after bouncing from a two-year low at 0.8225 earlier this week.

Data from the UK released earlier on Friday revealed that the Gross Domestic Product contracted for the second consecutive month, with Manufacturing production dropping sharply. These figures cast doubt on the UK’s economic outlook and add pressure on the BoE to keep easing monetary policy.
 

The Pound had rallied about 1.6% against the Euro in December and more than 3% since early August on speculation that the softer Eurozone economy would force the ECB to cut rates deeper than the BoE.

The ECB trimmed its benchmark interest rate by 25% basis points on Thursday and is expected to keep cutting rates at every meeting in the first half of next year.

The BoE, on the other hand, is seen moving more slowly and keeping rates on hold at the current 4.75% next week although further negative data might put this view into question and add pressure on the GBP.

• EUR/GBP appreciates following the release of weaker-than-expected UK data for October.
• UK Gross Domestic Product contracted 0.1% MoM in October, against the expected increase of 0.1%.
• Germany’s seasonally adjusted Trade Balance reported a surplus of €13.4 billion for October, below the expected €16.1 billion.

EUR/GBP extends its gains for the second successive session following the release of key economic data from the United Kingdom (UK) and Germany, the largest economy in the European Union (EU) and the world's third-largest exporter. The EUR/GBP cross trades around 0.8280 during the early European hours on Friday.

Data released by the Office for National Statistics reported that the UK Gross Domestic Product (GDP) contracted 0.1% month-over-month in October, against the expected increase of 0.1%. Meanwhile, Industrial Production fell 0.6% MoM following a previous decline of 0.5%, against the expected 0.3% rise. The monthly Manufacturing Production declined 0.6% in October, against the expected 0.2% increase and September’s 1% decline.

The British Pound (GBP) may regain its ground due to the increased likelihood that the Bank of England (BoE) will adopt a slower pace of policy easing compared to other central banks in Europe and North America.

Germany's Federal Statistics Office reported a seasonally adjusted trade surplus of €13.4 billion for October, below the expected €16.1 billion and September's €17.0 billion. During the same period, German exports fell by 2.8%, while imports saw a slight reduction of 0.1%.

On Thursday, the European Central Bank (ECB) decided to reduce its Rate on Deposit Facility by 25 basis points (bps) to 3.0%, as expected. Similarly, the Main Refinancing Operations Rate was reduced by 25 bps to 3.15%. This was the third straight 25 bps interest rate cut by the ECB in a row and the fourth of the year.

The upside of the Euro could be limited as ECB President Christine Lagarde acknowledged that officials discussed reducing interest rates by 50 bps. Lagarde said, "Risks to growth are tilted to the downside" as "Trade friction (with the United States) could weigh on growth."

• The Euro remains practically unchanged, near two-year lows after the ECB’s rate cut.
• The European Central Bank eased interest rates to 3% from the previous 3.25% as widely expected.
• The BoE is expected to keep a less dovish outlook amid a resilient UK economy and higher inflationary trends.

The Euro remains depressed near two-year lows at 0.8220 following a widely expected 25 bps rate cut by the ECB. The pair has accelerated its downtrend this week and is approaching an eight-year low, at 0.8200.

European Central Bank eased its benchmark interest rate to 3% from 3.25% as widely expected. In a few minutes, President Lagarde will meet the press where she will be asked about the timing of the next rate cut.

The grim outlook of the Eurozone economy, coupled with the political uncertainty in the Regiou’s two main economies is adding pressure on the central bank to ease borrowing costs, even with inflation above target.

In the UK, the economy is showing more resilient, and the heavy spending budget released by the Labour cabinet is expected to stir inflationary prices. That will likely force the BoE to approach monetary easing more cautiously.

• EUR/USD stays afloat near the two-year low, around 0.8250, ahead of the ECB policy meeting on Thursday.
• The ECB is expected to cut interest rates by 25 bps to 3%.
• BoE interest rate expectations would be influenced by the employment data for the three months ending October and the CPI data for November.

The EUR/GBP pair trades cautiously near a two-year low around 0.8250 in the North American session on Wednesday. The cross remains vulnerable ahead of the European Central Bank (ECB) monetary policy meeting on December 18.

The ECB is almost certain to cut its Deposit Facility rate by 25 basis points (bps) to 3% as officials are worried about contracting Eurozone business activity and are confident that inflation is under control.

As the ECB is widely anticipated to cut interest rates on Thursday, investors will pay close attention to the interest rate guidance after President Christine Lagarde. Market experts expect Lagarde to deliver somewhat dovish remarks on the assumption that higher import tariffs by US President-elect Donald Trump will impact the Eurozone export sector significantly. Also, the collapse of the German and French coalition governments would result in a delay in the administration’s expenditure plans.

Meanwhile, the Pound Sterling (GBP) remains an outperformer across the board as the Bank of England (BoE) is expected to leave interest rates unchanged at 4.75% in the policy meeting on December 19. Traders see the BoE keeping interest rates at their current levels as officials have remained concerned over price pressures remaining persistent.

Before the BoE meeting, employment data for the three months ending October and the Consumer Price Index (CPI) data for November are due for release, which could influence BoE interest rate expectations.

• EUR/GBP trades softer to around 0.8245 in Wednesday’s early European session. 
• Hopes of further ECB monetary easing on Thursday weigh on the Euro. 
• The BoE is expected to keep the rate on hold next week as policymakers signaled they will cut only gradually. 

The EUR/GBP cross remains on the defensive near 0.8245 during the early European trading hours on Wednesday. The growing speculation that the European Central Bank (ECB) will cut another interest rate at the December meeting continues to undermine the Euro (EUR) against the Pound Sterling (GBP). 

Investors might prefer to wait on the sidelines ahead of the ECB interest rate decision on Thursday. The ECB is anticipated to cut the Deposit Facility Rate to 3.0% from 3.25%. It would be the ECB's third straight reduction amid a bleak eurozone outlook. "While there is a strong case for the ECB to accelerate the pace of policy easing by delivering a (half point) cut, a majority of the governing council seems to prefer a quarter-point reduction,” noted Capital Economics analysts. 

On the other hand, the Bank of England (BoE) policymakers hinted that they would cut the interest rate gradually. "Signalling from the BoE about gradual rate reductions has been very strong of late, suggesting very low odds of a cut next week," said JP Morgan economist Allan Monks. 

Traders are currently betting on the BoE cutting interest rates only three times between now and the end of 2025, lowering the Bank Rate by a total of 75 bps. The expectation that the UK central bank will likely move more slowly to reduce borrowing costs than the ECB provides some support to the GBP and creates a headwind for the EUR/GBP cross. 

• The Euro dives to fresh two-year lows below 0.8260 weighed by weak German data and a risk-averse sentiment
• German HICP contracted at a 0.7% pace in November, its worst reading Since December 2022.
• The diverging ECB and BoE monetary policy expectations are likely to keep the Euro under pressure.

The Euro resumed its broader bearish trend on Tuesday, breaking below November’s low at 0.8260 to reach its lowest prices in more than two years. A dismal risk mood and hopes of further ECB monetary easing this week are hammering the Euro across the board.

Earlier today, German CPI revealed that price inflation contracted 0.7% in November, highlighting the weak momentum of the Eurozone’s main economy and increasing pressure on the ECB to lower borrowing costs.

The bank is widely expected to cut rates by 25 basis points on Thursday. Investors, however, will be eager to know whether the weak economic outlook and the political uncertainty in Germany and France have altered the bank’s usual neutral forward guidance.. 

The UK, on the contrary, is showing a more resilient outlook, with the heavy-spending Labour budget expected to stir inflationary pressures. This will likely limit the BoE’s leeway to cut rates in 2025, which is giving a competitive advantage to the GBP.

The US Dollar (USD) is narrowly mixed to a little firmer against the majors in quiet trade. It’s another very light session for data, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD mixed to firmer in quiet trade as markets await CPI

“Markets have little incentive to move significantly ahead of tomorrow’s major event risk in North America—US CPI data and the BoC policy decision. The GBP and MXN are grinding out small gains on the USD so far on the session while the AUD has given up yesterday’s China stimulus-driven bump to slide more than 0.6%, pulling the NZD lower with it.”

“The RBA policy meeting overnight concluded with no change in the policy rate, as expected, but policymakers indicated that they are gaining confidence in the inflation outlook which prompted markets to boost expectations that a rate cut could, finally, emerge in February. Global stock trends look a little soft again after yesterday’s US market losses when the Santa rally appeared to stumble a bit. The S&P 500 is up more than 30% this year so a correction ought not surprise.”

“The charts suggest that the stock rally may be starting to look a bit stretched and might be losing momentum. Soft stocks may have given the USD a bit of a lift in European trade but the roots of the dollar gains seen in the past few days really lie in the strong rebound seen around Friday’s jobs data. In contrast to the ‘seasonal’ soft trend in the USD that we often see in December, near-term risks appear geared towards a bit more strength in the DXY towards 106.75. Support is 106.00/05.”

• EUR/GBP posts modest gains near 0.8280 in Tuesday’s early Asian session. 
• The BoE keeps a cautious stance on its easing path. 
• ECB is widely expected to cut its key interest rate by 25 bps to 3.00% at its December meeting on Thursday. 

The EUR/GBP cross trades with mild gains around 0.8280 during the early European session on Tuesday. However, the upside for the cross might be limited as the rising bets that the Bank of England (BoE) will stick to a gradual script for rate cuts provide some support to the Pound Sterling (GBP) against the Euro (EUR). 

The BoE policymaker Swati Dhingra warned that high interest rates are bearing down on the economy by curbing consumer spending and business investment. Dhingra added that she is in favor of “gradual” interest rate reductions and that the long-term neutral interest rate is likely to be in the range of 2.5% to 3.5%.

The expectation that the UK central bank cuts interest rates more gradually compared with other major central banks could lift the GBP. Markets expect the BOE to leave rates unchanged at 4.75% at its December meeting but expect rates to be cut by a further 75 basis points (bps) in total next year.

On the Euro front, markets expect the European Central Bank (ECB) to lower its key deposit rate by a quarter percentage point to 3% on Thursday. Investors then expect five more 25 bps rate cuts next year that will bring down the deposit rate to 1.75%, according to the LSEG. The ECB President Lagarde’s press conference and the updated macroeconomic projections will be closely watched. The ECB is expected to lower its inflation and real GDP growth predictions, which might result in a downward adjustment to ECB easing expectations, weighing on the shared currency. 

• EUR/GBP ticks lower as Sterling gains on expectations that the BoE will leave interest rates unchanged in the policy meeting on December 19.
• EC officials see the impact of French political turmoil to be limited on the Eurozone.
• The ECB is expected to cut its Deposit Facility Rate by 25 bps to 3%.

The EUR/GBP pair ticks lower to near 0.8285 in Friday’s North American session after struggling to extend Thursday’s recovery above the key resistance of 0.8300. The cross drops as the Pound Sterling (GBP) performs strongly across the board on expectations that the Bank of England (BoE) will be among those central banks whose policy-easing cycle will be slowest.

Financial market participants expect the BoE to follow a gradual rate-cut approach on the assumption that price pressures in the United Kingdom (UK) economy are persistent. At the Global Boardroom event organized by the Financial Times (FT) on Thursday, BoE Monetary Policy Committee (MPC) external member Megan Greene said, “I suspect we'll hit our inflation target by the end of our forecast period, which is three years.”

While the UK economic calendar has nothing much to offer in a period of a week, the British currency is expected to be influenced by the market expectations for the BoE likely interest rate decision on December 19. Traders expect the BoE to leave interest rates unchanged by 4.75%.

Meanwhile, the Euro (EUR) rebounded after the European Commission spokesman Balazs Ujavri commented that the impact of French political turmoil would be limited and contained. "We follow very closely what is going on in France,” and "What we see for now is that the economic effect is rather contained and limited. The macroeconomic situation in France remains stable," Ujavri said, Reuters reported.

Michel Barnier’s government in the French economy collapsed after losing the no-confidence vote, which was proposed by the Far Right and the Left-wing.

However, the Euro’s upside remains limited as the European Central Bank (ECB) is widely anticipated to cut interest rates in its policy meeting on Thursday. Traders expect the ECB to cut is Deposit Facility Rate by 25 basis points (bps) to 3%.

GBP:USD briefly sold off and then recovered after Bank of England (BoE) Governor Andrew Bailey seemed to confirm that the bank was looking at four rate cuts over the next year. EUR/GBP to stay gently offered, ING’s FX analyst Chris Turner notes.

Inflation expectations at 1030CET may set the scene

“Elsewhere, GBP:USD briefly sold off and then recovered after Bank of England Governor Andrew Bailey seemed to confirm that the BoE was looking at four rate cuts over the next year, with the market only pricing three. However, those remarks did look a bit 'technical' – in that they merely confirmed what the BoE had been using in its models for its forecasts.”

“Expect EUR/GBP to stay gently offered and look out for inflation expectations at 1030CET today and a speech by BoE hawk, Megan Greene, at 18CET.”