Ella 
EUR/GBP continues to fall amid challenges facing the euro following dovish comments from European Central Bank (ECB) policymaker Francois Villeroy. EUR/GBP fell to around 0.8540 during the Asian session on Friday.
Villeroy highlighted the significant decline in core inflation. He expressed confidence that the European Central Bank will achieve its 2% inflation target, but warned that downside risks will continue to escalate if the European Central Bank delays in implementing interest rate cuts.
In addition, Fabio Panetta, a member of the European Central Bank’s executive board, stressed on Thursday that the conditions for implementing loose monetary policy are emerging. He pointed out that restrictive policies are suppressing demand and causing inflation to fall rapidly. Panetta also said risks to price stability were decreasing.
Sterling (GBP) may retain its position due to hawkish comments from Bank of England official Jonathan Haskel. He said a rate cut should be “far off”, while his colleague Katherine Mann warned against getting too high hopes for a rate cut this year.
Although Bank of England officials expressed reluctance to cut interest rates, the pound may come under downward pressure after economic data showed that the British economy will enter recession in the second half of 2023. UK gross domestic product (GDP) shrank by 0.3% quarter-on-quarter in the fourth quarter of 2023, in line with preliminary estimates.
