EUR/GBP remains below 0.8550 amid improved Eurozone manufacturing figures

• EUR/GBP continues to lose ground despite improved Eurozone manufacturing data.
• Eurozone Industrial Production (MoM) rose by 0.8% in February, swinging from a 3.0% decrease in January.
• The Pound Sterling might have received support from the hawkish remarks from BoE’s policymaker.

EUR/GBP moves downward to near 0.8540 during the European trading hours on Monday. The Euro (EUR) failed to react to the improved data from the Eurozone’s manufacturing sector. The seasonally adjusted Industrial Production increased by 0.8% MoM in February, swinging from the previous decline of 3.0%. The annual index reduced by 6.4% for the said period, lower than the previous decrease of 6.6%.

The EUR encountered struggles against the GBP following the European Central Bank’s (ECB) indication that there might be a consideration to lower policy rates in June if underlying inflation continues to decelerate as anticipated.

According to Reuters, Gediminas Šimkus, a member of the ECB Governing Council, suggested on Monday above 50% probability of witnessing more than three rate cuts throughout the year.

The Pound Sterling (GBP) appreciates on adjusting market forecasts for interest rate cuts by the Bank of England (BoE). The policy rate is now expected to decline to around 4.75% by the end of 2024, down from the current rate of 5.25%. This marks a shift from the previous expectation of a drop to 4.5% by December.

Additionally, the hawkish remarks from BoE’s policymaker, Megan Greene have supported the British Pound (GBP), which might have contributed to pressure on the EUR/GBP cross. She emphasized that rate cuts in the United Kingdom (UK) should still be considered distant, pointing to a greater risk of persistent inflation in the country.

Traders will likely pay close attention to the speech by Sarah Breeden, BoE’s Deputy Governor for Financial Stability, at the Innovate Finance Global Summit 2024 on Monday.