Anna 
The EUR/GBP pair is experiencing a decline, reaching around 0.8550 during the European session on Thursday. The slump is attributed to uncertainty surrounding the upcoming European Central Bank (ECB) interest rate decision, scheduled to be announced at 13:15 GMT.
Market expectations anticipate the ECB to maintain the Main Refinancing Operations Rate at 4.5% for the fourth consecutive time, alongside keeping the Rate on Deposit Facility at 4%. While a steady interest rate decision is widely anticipated, investors are keen to gain insights into the central bank’s timeline for potential rate reductions.
ECB President Christine Lagarde previously hinted at possible rate cuts by the Summer during an interview with Bloomberg in January. However, she cautioned against premature rate cuts, emphasizing the need for evidence that inflation is on track to return to the 2% target.
In the UK, the Pound Sterling is strengthening, driven by a stable inflation outlook, enabling the Bank of England (BoE) to maintain higher interest rates compared to other G-7 economies. The EUR/GBP pair’s movements will likely be influenced by ECB President Lagarde’s statements on potential rate cuts and the overall economic climate in the Eurozone.
Traders are closely monitoring Lagarde’s remarks on inflation indicators and the outlook for achieving price stability. The GBP’s strength, supported by the UK’s economic data, contrasts with the uncertainty surrounding the Euro, contributing to the decline in the EUR/GBP pair. The impact on the pair will continue to be influenced by Eurozone developments, making it a key focus for traders in the near term.
