The EUR/GBP pair trades inside Thursday’s trading range in Friday’s European session.
EUR/GBP is stuck in a tight range around 0.8550 as the focus shifts to the BoE monetary policy announcement. The Euro struggles to extend the upside as the ECB is expected to announce rate cuts sooner than the BoE. ECB Stournaras see three rate cuts this year. The cross struggles to extend its three-day winning spell on firm speculation that the European Central Bank will start reducing interest rates from the June meeting.
Meanwhile, firm expectations for ECB rate cuts combined with stronger than expected Q1 Gross Domestic Product numbers have improved the Eurozone economic outlook. Quantitative easing will result in a sharp increase in leakage of liquidity into the economy as businesses would be able to tap advances from commercial banks at lower borrowing rates. On the United Kingdom front, investors shift focus to the Bank of England’s interest rate decision, which will be announced on May 9.
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