Market Analysis

The EUR/GBP pair remains steady around 0.8355 in early European trading on Thursday. However, a shift towards a less dovish stance by the Bank of England (BoE) may lend some support to the Pound Sterling (GBP). Market participants are also awaiting further insights from European Central Bank (ECB) policymakers, including speeches from ECB President Christine Lagarde, Frank Elderson, and Luis de Guindos later today.

The BoE's cautious outlook could strengthen the GBP against the Euro (EUR). On Wednesday, BoE policymaker Megan Greene noted, "I believe the risks to activity are to the upside, which could indicate that the long-run neutral rate is higher, and, all else being equal, our policy stance is not as restrictive as we previously thought. Given this risk, I think it’s appropriate to take a gradual approach to reducing restrictiveness."

Meanwhile, weaker-than-expected German IFO data earlier this week has heightened fears of a potential recession in Germany, raising expectations of additional ECB rate cuts. HSBC analysts suggest that the ECB might lower its key deposit rate by 25 basis points (bps) at each of its upcoming meetings through April next year. On Friday, the Eurozone Consumer Confidence and Industrial Confidence reports for September will be released, and any signs of economic improvement could help limit the Euro's downside in the near term.

Paraphrasing text from "FX Street" all rights reserved by the original author.