EUR/GBP remains subdued around 0.8500 due to US-UK trade deal hopes, BoE decision in focus
- EUR/GBP struggles on hopes that the Trump administration may soon announce a trade agreement with the United Kingdom.
- The BoE is widely expected to deliver a 25 basis point rate cut, but traders seek signals on the outlook.
- Germany’s trade surplus rose sharply to EUR 21.1 billion in March, beating expectations of EUR 19.1 billion.
EUR/GBP is extending losses for the fourth consecutive session, trading near 0.8500 in early European hours on Thursday. However, the currency cross is coming under pressure as the Pound Sterling (GBP) strengthens on speculation that the Trump administration may soon announce a trade agreement with the United Kingdom.
According to “The New York Times”, citing three sources, US President Donald Trump is expected to unveil the deal on Thursday. Trump teased the announcement Wednesday night, posting: “Big News Conference tomorrow at 10:00 A.M., The Oval Office, concerning a MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY. THE FIRST OF MANY!!!”
Market attention now shifts to the Bank of England’s (BoE) interest rate decision, also due Thursday. A 25 basis point rate cut is widely anticipated, but investors will be watching for signals on future easing, particularly in light of trade optimism.
Meanwhile, Germany’s trade surplus rose sharply to EUR 21.1 billion in March, up from a revised EUR 17.9 billion in February and beating expectations of EUR 19.1 billion. Exports climbed 1.1% MoM to EUR 133.2 billion—an 11-month high—while imports unexpectedly fell 1.4% to EUR 112.1 billion.
Despite recent GBP strength, downside in the EUR/GBP cross may be limited as the Euro (EUR) could find support following political developments in Germany. Conservative leader Friedrich Merz was sworn in as Chancellor in a second attempt, after narrowly missing the required majority in the initial vote.
Economic Indicator
BoE Interest Rate Decision
The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.
Read more.Next release: Thu May 08, 2025 11:02
Frequency: Irregular
Consensus: 4.25%
Previous: 4.5%
Source: Bank of England
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
