The EUR/GBP pair managed to claw back some of its intraday losses following disappointing housing data from the UK, although it continues to hover in negative territory, trading around 0.8550 during European trading hours on Tuesday.
In March, the non-seasonally adjusted Nationwide Housing Prices reported a year-over-year increase of 1.6%, falling short of market expectations of a 2.4% rise and trailing the previous figure of 1.2%. The monthly index indicated a decrease of 0.2%, contrary to the anticipated increase of 0.3% and the previous increase of 0.7%. Analysts are closely monitoring key indicators such as the S&P Global PMI and Halifax House Prices data to assess the UK economic landscape.
Bank of England (BoE) Governor Andrew Bailey’s comments regarding market forecasts for three quarter-point rate reductions in 2024 being reasonable, coupled with the absence of significant persistent inflationary pressures, have fueled expectations for interest rate cuts by the BoE in June, consequently exerting downward pressure on the Pound Sterling (GBP).
Meanwhile, Germany’s HCOB Manufacturing PMI rose to 41.9 in March, from the previous reading of 41.6. Traders are now awaiting Consumer Price Index (CPI) data from Germany scheduled to be released later in the day, while Wednesday brings Harmonized Index of Consumer Prices (HICP) data from the Eurozone.
The Euro has been under pressure following dovish remarks from European Central Bank (ECB) members. ECB Governing Council member Yannis Stournaras suggested the possibility of four interest rate cuts in 2024, totaling a 100 basis point reduction by year-end. Additionally, ECB policymaker Robert Holzmann indicated that interest rate cuts are likely, contingent upon the evolution of wage and price dynamics by June. These remarks have dampened sentiment surrounding the Euro, subsequently undermining the EUR/GBP cross.
