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The EUR/GBP pair holds positive ground above the mid-0.8500s during the early European trading hours on Friday. Investors await the Eurozone Harmonized Index of Consumer Prices (HICP) for fresh impetus. The cross currently trades near 0.8560, down 0.01% on the day.

The European Central Bank (ECB) is anticipated to take another step in its policy normalization process. The ECB President Christine Lagarde would rule out rate cuts at the March meeting, but financial markets believe that the first potential rate cuts might occur in the June meeting. The markets repriced policy easing expectations in February from around 150 basis points (bps) worth of rate cuts to 87 bps and expect the first rate cut in June of 25 bps and a total of 75 bps for this year. 

The Bank of England (BoE) Deputy Governor Dave Ramsden said he wants to see how long inflation will remain elevated before considering shifting monetary policy stance. The BoE policymakers pushed back against market expectations for early interest rate cuts, which lift the Pound Sterling (GBP) and cap the downside of the EUR/GBP cross. 

Looking ahead, market players will keep an eye on the Eurozone Harmonized Index of Consumer Prices (HICP) due on Friday, along with the HCOB Manufacturing PMI from Italy, France, and Germany. Additionally, the BoE's Huw Pill is set to speak later in the day. The attention will shift to the ECB interest rate decision next week. This event might trigger the volatility in the market and traders could find trading opportunities around the EUR/GBP cross. 

EUR/GBP

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