EUR/GBP oscillates in a narrow range above 0.8600 ahead of Eurozone, UK PMI data

The EUR/GBP cross remains confined in a narrow trading range between 0.8607 and 0.8617 during the early European session on Friday. The European Central Bank (ECB) and Bank of England (BoE) decided to maintain the interest rates on Thursday, as widely expected. The attention has now shifted to the top-tier data from both the Eurozone and the UK on Friday, which could give a clear direction to the cross. At press time, EUR/GBP is trading at 0.8609, up 0.03% on the day.

The ECB held interest rates steady at 4.0% at its December meeting. ECB President Christine Lagarde said on Thursday that there was work to be done to bring the inflation back to its 2.0% target and we should not lower our guard against consumer price pressures. Analysts anticipate the ECB will cut rates next year, even though the timeframe is uncertain, with forecasts ranging from March to September.

On the other hand, the BoE maintained the benchmark rates unchanged at a 15-year high of 5.25%. The BoE Governor Andrew Bailey said there was still some way to go in the UK. Bailey also highlighted that the central bank would continue to closely track the data and take the appropriate action to bring back inflation to 2.0%

Market participants await the preliminary German and Eurozone HCOB Purchasing Managers' Index (PMI) for December on Friday. Also, the first reading of UK S&P Global/CIPS PMI for December will be due later in the day. Traders will take cues from these data and find trading opportunities around the EUR/GBP cross.