- EUR/GBP edges lower on dovish comments made by ECB members.
- ECB’s Yannis Stournaras hinted four rate cuts, amounting to a reduction of 100 bps, could take place in 2024.
- The Bank of England could initiate three quarter-point rate reductions in 2024.
EUR/GBP retraces its gains registered in the previous session, hovering around 0.8550 during the early European hours on Monday. European Central Bank (ECB) Governing Council member Yannis Stournaras suggested on Sunday that a total of four interest rate cuts could occur in 2024, resulting in a total reduction of 100 basis points (bps) by year-end. This has added pressure to undermine the EUR/GBP cross.
However, the anticipation of the Bank of England (BoE) initiating three quarter-point rate reductions in 2024 could continue to exert pressure on the GBP. Weak economic data indicating that the UK economy slipped into recession in the second half of 2023 has contributed to limiting this retracement. BoE Governor Andrew Bailey's statement hinting at potential interest rate cuts in future policy meetings has further weighed on the Pound Sterling (GBP).
With a dearth of high-impact data expected from the United Kingdom (UK) throughout the week, traders are anticipated to assess the UK economic landscape by closely observing indicators such as Nationwide Housing Prices, S&P Global PMI, and Halifax House Prices data, which are scheduled for release during the week.
ECB policymaker Robert Holzmann stated that interest rate cuts are likely to come, but it will depend on what wage and price developments look like by June. Furthermore, attention will be drawn to the German Consumer Price Index (CPI) slated for release on Tuesday, and the Eurozone Harmonized Index of Consumer Prices data, which will be eyed on Wednesday.
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