Anna 
The EUR/GBP pair maintains its positive stance, residing above the mid-0.8500s in the early European trading session on Friday. Investor focus centers on the forthcoming Eurozone Harmonized Index of Consumer Prices (HICP), which is anticipated to provide fresh impetus to the currency cross. Currently trading near 0.8560, the pair reflects a marginal 0.01% decline for the day.
Market expectations revolve around the European Central Bank (ECB) potentially advancing its policy normalization process. ECB President Christine Lagarde is expected to exclude rate cuts during the March meeting, with speculations mounting on the likelihood of the first rate cuts materializing in June. In February, markets recalibrated their policy easing anticipations from approximately 150 basis points (bps) to 87 bps. The consensus leans towards a 25 bps cut in June and a cumulative 75 bps reduction for the year.
On the other front, Bank of England (BoE) Deputy Governor Dave Ramsden expressed a cautious approach, emphasizing the need to assess the duration of elevated inflation before contemplating any shift in the monetary policy stance. This stance from BoE policymakers has steered market expectations away from early interest rate cuts, contributing to the strength of the Pound Sterling (GBP) and limiting the downside potential for the EUR/GBP cross.
Looking ahead, market participants will closely monitor the Eurozone Harmonized Index of Consumer Prices (HICP) release scheduled for Friday, in addition to the HCOB Manufacturing PMI reports from key Eurozone countries such as Italy, France, and Germany. BoE’s Huw Pill is also set to deliver remarks later in the day. Attention will subsequently shift to the ECB interest rate decision in the upcoming week, with the potential to inject volatility into the market and offer trading opportunities for EUR/GBP traders.
