Euro posts modest losses against British Pound ahead of ECB’s annual forum
The EUR/GBP cross loses ground to near 0.8625 during the early European trading hours on Monday. Fading additional rate hike expectations from the European Central Bank (ECB) weigh on the Euro (EUR) against the British Pound (GBP). Traders will closely watch the ECB’s annual forum later on Monday.
While the ECB raised its deposit rate by 25 basis points (bps) to 2.25% at its June policy meeting, President Christine Lagarde said last week that the central bank does not need to respond aggressively to Middle East conflict spillovers, adding that the inflation shock facing the Eurozone is too large to ignore but not yet large enough to push up longer-term rates.
Financial markets have pared back their bets for further rate hikes amid sliding oil prices. According to ECB Watchtool, traders have priced in a 94.0% probability of no change in rates. ECB President Christine Lagarde will open the forum on Monday. Her remarks could give some clues about evolving central bank policies.
On the other hand, the UK political transition with deteriorating domestic economic data could undermine the GBP and act as a tailwind for the cross. The former Greater Manchester mayor will outline his vision for the United Kingdom (UK) on Monday, per the Guardian.
Keir Starmer last week faced political pressure and announced he would step down as leader of the ruling Labour Party. The schedule to pick a successor could see Burnham installed as Prime Minister as soon as July 17, if no other challenger emerges.
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