- EUR/GBP appreciates as Eurozone Manufacturing PMI increased to 47.3 in May, the highest reading since March 2023.
- ECB is expected to deliver a 25-basis point rate cut on Thursday.
- Citi/YouGov survey indicated UK public expectations for inflation for the next 12 months have declined to the lowest since July 2021.
EUR/GBP continues to rise for the third successive session, trading around 0.8530 during the European hours on Monday. The appreciation in the currency cross can be attributed to the HCOB Eurozone Manufacturing PMI, which increased to 47.3 in May from 45.7 in April, slightly below the preliminary estimate of 47.4. This is the highest reading since March 2023, indicating the slowest decline in the Eurozone manufacturing sector in over a year.
Investors have factored in the European Central Bank (ECB) to cut interest rates on Thursday, but it may signal a halt in July and slower rate reductions in the coming months. Financial markets have priced in nearly 25 basis points (bps) of ECB rate cuts in June and 57 bps of cuts in 2024, according to Reuters.
Traders will closely monitor ECB President Christine Lagarde's press conference for fresh signals on the pace of rate cuts after June. Any dovish message from the ECB is likely to weigh on the Euro and create a headwind for the EUR/GBP cross.
In the United Kingdom (UK), investors remain uncertain about the Bank of England’s (BoE) rate-cut time frame. Although UK annual headline inflation significantly dropped to 2.3% in April, BoE policymakers are still concerned about the slower progress in the disinflation process within the services sector. As per Citi/YouGov survey, UK public expectations for inflation for the next 12 months have declined to 3.1% in May, the lowest level since July 2021, per a Reuters report on Friday.
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 rose to fresh highs around 1.1240
EUR/USD maintained its bullish momentum on Thursday, climbing to the 1.1240 region as the US Dollar accelerated its decline amid growing concerns about the economic fallout from Trump's tariffs.
GBP/USD picks up pace, challenges 1.3000
GBP/USD made significant gains, edging just pips shy of the psychological 1.3000 barrier. The advance came amid trade war jitters and a sharp sell-off in the Greenback following the announcement of 145% US tariffs on China.
Gold flirts with record peaks near $3,175, Dollar tumbles
Gold continued its record-setting rally on fresh tariff-related headlines, surging past the $3,170 mark per troy ounce after the White House confirmed new tariffs, sparking another round of US Dollar selling.
Cardano stabilizes near $0.62 after Trump’s 90-day tariff pause-led surge
Cardano stabilizes around $0.62 on Thursday after a sharp recovery the previous day, triggered by US Donald Trump’s decision to pause tariffs for 90 days except for China and other countries that had retaliated against the reciprocal tariffs announced on April 2.
Trump’s tariff pause sparks rally – What comes next?
Markets staged a dramatic reversal Wednesday, led by a 12% surge in the Nasdaq and strong gains across major indices, following President Trump’s unexpected decision to pause tariff escalation for non-retaliating trade partners.
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.