Ella 
EUR/GBP fell further on Monday, falling below 0.8550, with EUR/GBP trading lower as the European Central Bank (ECB) gets closer to a first interest rate cut in June or July. Highlights from ECB officials sent mixed signals to markets, devaluing the euro as investors grappled with inconsistent signals from monetary policymakers.
The European Central Bank’s dovish interest rate policy has recently been at the forefront, led by the comments of ECB policymaker Martins Kazaks. Kazak noted on Monday that rate cuts could begin in June. ECB official Kazak’s speech muddied the signals the ECB has released in recent weeks, which ranged from advising further caution on interest rates to some policymakers raising the possibility of starting to cut interest rates in July.
With the ECB increasingly likely to cut interest rates as early as July, the interest rate differential between the ECB and the Bank of England (BOE) is likely to widen, weakening EUR/GBP.
Key UK inflation data due out this week will help traders gauge the outlook for the Bank of England’s interest rate policy. UK consumer price index (CPI) inflation is due to be released on Wednesday and is expected to slow to 2.1% year-on-year in April from 3.2% previously. Later this week, the EU and UK are due to publish Purchasing Managers Index (PMI) results. UK retail sales are due to be released on Friday, the last trading day of the week.
