Anna 
EUR/GBP maintained a defensive stance around 0.8550 during early European trading on Thursday, with the market closely monitoring the upcoming European Central Bank (ECB) monetary policy decision. At the time of reporting, the currency pair was trading at 0.8556, reflecting a marginal increase of 0.01% for the day.
Expectations are widespread that the ECB will maintain the current record-high interest rates at its January meeting. Reuters reports indicate a 60% market expectation of a potential interest rate cut by the ECB in April, marking the first such move. ECB President Christine Lagarde, speaking at Davos, suggested a cautious approach, indicating the possibility of the first interest rate cut in the summer of 2024. Lagarde emphasized the importance of relying on data for the final outlook.
In contrast, the Bank of England (BOE) is anticipated to keep interest rates unchanged on February 1, with a potential initiation of a rate cut cycle at its August meeting. Market consensus points to the likelihood of BOE interest rate cuts in 2024 due to a significant decline in inflation since its peak of 11.1% in October 2022.
Traders and investors are eagerly awaiting the ECB’s interest rate decision, seeking additional insights from the subsequent press conference. ECB President Christine Lagarde’s remarks during the speech may offer clues regarding the future path of monetary policy, potentially providing a clear direction for EUR/GBP.
