Image Source: Pixabay
 

• EUR/GBP rebounds from 0.8386, the lowest level since August 2022.
• ECB’s Lagarde suggested being mindful that the growth outlook remains uncertain.
• The British Pound could limit its losses as investors view UK markets more attractive investment destination.

EUR/GBP halts its losing streak, trading around 0.8400 during the European hours on Monday. The Euro may find support as expectations for further rate cuts by the European Central Bank (ECB) diminish. Investors foresee inflation pressures remaining steady through 2024.

ECB President Christine Lagarde highlighted a cautious stance this month, stating, “The strong labour market means that we can take time to gather new information, but we also need to be mindful of the fact that the growth outlook remains uncertain.”

On the other hand, the British Pound (GBP) could limit its losses as investors view the United Kingdom (UK) markets as a more attractive investment destination compared to the European Union, which faces political uncertainties. The decisive victory of Keir Starmer’s Labour Party has assured stable fiscal policies and smooth ministerial appointments.

The UK's new Chancellor, Rachel Reeves, has pledged to stimulate growth and investment, focusing on the supply side due to limited government spending capacity. This pledge comes amid deepening uncertainty over the timeframe for Bank of England (BoE) rate cuts, which has been a significant factor in GBP’s strength. Traders anticipate the BoE to start lowering interest rates at the August meeting.

Traders will assess Eurozone industrial production numbers for May on Monday, which can provide additional insights into European Central Bank policy. On the UK front, Office for National Statistics (ONS) will publish the inflation and employment data later in the week.

More By This Author: