Anna 
During the European session on Friday, the EUR/GBP pair exhibited a robust bounce back from the 0.8530 level. Despite market expectations of the Bank of England (BoE) initiating interest rate reductions following the European Central Bank (ECB), the cross showed resilience.
Forecasts indicate a likelihood of the ECB implementing interest rate cuts during the June policy meeting. Several ECB policymakers have expressed support for this decision, citing a significant slowdown in inflationary pressures within the Eurozone economy. Core inflation decreased to 3.1% in February, and there are limited indications of notable improvements in the economic outlook, constraining price pressures.
Notably, ECB Governing Council member Klaas Knot voiced his belief that the central bank would commence interest rate cuts in June. Additionally, ECB Governing Council member Yannis Stournaras advocated for an early rate reduction, dismissing arguments against the ECB’s ability to cut rates before the Fed. Stournaras suggested that four rate cuts in 2024 appear reasonable.
Concurrently, the Pound Sterling faced slight downward pressure as investor attention shifted towards the impending BoE interest rate decision, scheduled for Thursday. Expectations favor the BoE maintaining interest rates at 5.25%. However, prior to this announcement, the UK’s inflation data for February will be closely monitored.
Market reactions to the inflation data will shape expectations regarding BoE rate adjustments, which are currently leaning towards an initial rate cut in August.
