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• EUR/GBP edges lower to 0.8601 on Thursday.
• ECB’s de Guindos said the eurozone may have been in recession last quarter and prospects in the near term remain weak.
• Bank of England (BoE) Governor Bailey highlighted that it’s important to curb inflation towards its 2% target.

The EUR/GBP cross snaps the two-day winning streak during the early European trading hours on Thursday. The cross hovers around the 0.8600 mark after retreating from the weekly high of 0.8620.

The eurozone may have been in recession last quarter, and prospects in the near term remain weak, ECB Vice President Luis de Guindos said on Wednesday. Additionally, ECB’s member Isabel Schnabel said the central bank is on the right track to curb inflation while mentioning geopolitical tensions as one of the upside risks to inflation. ECB policymaker Mario Centeno said that the central bank will cut its key interest rates sooner than it recently thought and should not wait until May to make a decision.

The markets anticipate that the ECB will cut rates this year, with the first move beginning in March or April. That being said, the pricing of aggressive future rate cuts by the ECB compared to the Bank of England's (BoE) should cap the EUR/GBP’s upside.

On the British Pound front, the Bank of England (BoE) Governor Andrew Bailey said on Wednesday that it’s important to curb inflation towards its 2% target and further stated that the UK hasn’t witnessed a rise in unemployment. Bailey claimed that household income has lately increased, which has helped to ease the effect of higher interest rates.

The Industrial Output from Spain and Italy and Economic Bulletin will be due on Thursday. On Friday, traders will monitor UK Manufacturing Production, Industrial Production, and monthly Gross Domestic Product (GBP) for November. ECB Philip Lane is set to speak on Friday. Market players will take cues from the data and find trading opportunities around the EUR/GBP cross.

EUR/GBP

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