EUR/GBP extends its gains for the second consecutive session, trading near 0.8720 during Asian hours on Friday. The Euro (EUR) benefits from expectations that the European Central Bank (ECB) will maintain a cautious policy stance amid ongoing economic uncertainty.
Eurozone data in focus
Traders await HCOB Purchasing Managers’ Index (PMI) releases from the Eurozone and Germany later in the day, alongside Eurozone Producer Price Index (PPI) figures. These data points could influence the near-term trajectory of EUR/GBP ahead of ECB commentary.
ECB policymaker Martins Kazaks said Thursday that current interest rates are “very appropriate” and can remain unchanged. He emphasized that high uncertainty necessitates maintaining full flexibility in policy decisions.
Pound consolidates amid inflation concerns
The upside in EUR/GBP may be limited as the British Pound (GBP) consolidates amid mixed Bank of England (BoE) signals. BoE policymaker Catherine Mann highlighted that the risk of “higher-for-longer” inflation is materializing, underscoring persistent price pressures and suggesting that holding rates steady is appropriate for now.
Meanwhile, BoE Deputy Governor Sarah Breeden warned that overly tight policy could push inflation below the 2% target. The latest BoE Decision Maker Panel (DMP) survey showed one-year ahead CPI expectations rising slightly to 3.5%, with realized own-price growth ticking up to 3.8%, up 0.1% from August.
