The EUR/GBP currency pair is experiencing a rebound on Tuesday, reversing the slight pullback observed the previous day near the 200-day Simple Moving Average (SMA), which had marked a two-and-a-half-month high. Heading into the European session, the pair turns positive for the fifth consecutive day, with bulls aiming to push prices beyond the 0.8400 level.
The British Pound (GBP) remains under pressure due to concerns about stagflation, a combination of high inflation and sluggish economic growth in the UK. The rising cost of borrowing, coupled with fears over the nation’s fiscal health, further dampens sentiment toward the GBP, providing a tailwind for the EUR/GBP cross.
Meanwhile, the Euro is struggling to gain significant momentum, hindered by the European Central Bank‘s dovish stance and persistent concerns regarding the weak economic outlook in the Eurozone. In December, the ECB cut interest rates for the fourth time and left the door open for additional easing measures in 2025, limiting upside potential for the EUR/GBP.
Looking ahead, Tuesday’s economic calendar offers no major releases from either the UK or the Eurozone. Market focus will shift to the scheduled speech by Bank of England Deputy Governor Sarah Breeden, which is expected to influence GBP sentiment and provide direction for the EUR/GBP cross ahead of the UK’s inflation data due Wednesday.
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