- 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%.
(This story was corrected on December 6 at 13:58 GMT to say, in the first paragraph, that the pair is EUR/GBP, not EUR/USD.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day, according to data from the Bank of International Settlements. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD accelerates losses to 1.0930 on stronger Dollar
The US Dollar's recovery regains extra impulse sending the US Dollar Index to fresh highs and relegating EUR/USD to navigate the area of daily troughs around 1.0930 in the latter part of Friday's session.
GBP/USD plummets to four-week lows near 1.2850
The US Dollar's rebound keep gathering steam and now sends GBP/USD to the area of multi-week lows in the 1.2850 region amid the broad-based pullback in the risk-associated universe.
Gold trades on the back foot, flirts with $3,000
Gold prices are accelerating their daily decline, steadily approaching the critical $3,000 per troy ounce mark as the Greenback's rebound gains extra momentum and US yields tighten their retracement.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.