EUR/GBP appreciates to near 0.8540 ahead of ECB Lagarde’s speech
|- EUR/GBP breaks its losing streak on hawkish remarks by ECB officials.
- ECB's Yannis Stournaras ruled out the possibility of rate cuts in March.
- MUFG Bank noted that the technical recession experienced in the second half of 2023 appears to be ending.
EUR/GBP halts its three-day losing streak, edging higher to near 0.8540 during the Asian session on Monday. The Euro (EUR) receives upward support on hawkish comments from European Central Bank’s (ECB) members. Additionally, ECB Monetary Policy Meeting Accounts for January indicated that policymakers maintain caution regarding easing monetary policy. They expressed a consensus that it was premature to discuss rate cuts at the meeting. Traders will likely watch the ECB President Christine Lagarde’s speech later on Monday.
On Friday, several European Central Bank (ECB) policymakers shared their views on economic conditions. ECB's Yannis Stournaras stated that he anticipates a rate cut in June, ruling out the possibility of rate cuts in March. On the other hand, ECB's Joachim Nagel remained confident that inflation will be brought under control, emphasizing the importance of not acting prematurely. Nagel suggested that the ECB should base its decisions on data rather than following the steps taken by other central banks.
On the other side, the lower February consumer confidence data from the United Kingdom (UK) might have weakened the Pound Sterling (GBP), consequently acting as a tailwind for the EUR/GBP pair. On Friday, the GfK Consumer Confidence index for the UK came in at -21, disappointing to the market expectations of a -18 reading and the previous reading of -19, indicating a contraction in consumer confidence in UK economic activity for February.
Economists at MUFG Bank noted that the recent UK PMI data suggests that the technical recession experienced in the second half of last year appears to be ending. The strengthening of global risk sentiment will likely allow the Bank of England (BoE) to maintain a patient stance, similar to other central banks. Furthermore, there remains a possibility of inflation reaching the 2% target in April. Huw Pill, Chief Economist at the Bank of England (BoE) will speak on Monday.
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