EUR/GBP rises to near 0.8570 amid expectations of rate cuts by major central banks

EUR/GBP continues its winning streak that began on March 29, climbing to near 0.8570 during the European trading hours on Thursday. The easing of global inflationary pressures has led to speculation about potential interest rate cuts by central banks.

Money market futures traders are anticipating a 25 basis point rate cut by the Bank of England (BoE) in June, with odds currently standing at 66%. On the other side, the Eurozone annual rate of inflation declined more than expected in March, prompting speculation that the European Central Bank (ECB) may cut interest rates in June.

On Wednesday, the Eurozone Harmonized Index of Consumer Prices (HICP) for March was reported at a year-over-year rate of 2.4%, missing the market estimation of an unchanged 2.6% rise in the reported period.

BoE Governor Andrew Bailey has recently commented that, with further encouraging signs indicating a cooling inflation trend, the UK economy is moving towards a point where the central bank could consider interest rate cuts. ECB policymaker Pablo Hernandez de Cos stated on Wednesday that he is not explicitly providing forecasts on future monetary policy. However, he mentioned that recent inflation data is in line with the central bank's mandate of achieving its inflation objective.

Pablo Hernandez also mentioned that the ECB could begin cutting interest rates in June due to a sustained slowdown in inflation across the bloc. Additionally, ECB policymaker Robert Holzmann remarked that the central bank might initiate interest rate cuts in June, as inflation could decline more rapidly than initially anticipated.