EUR/GBP Falls Below 0.8710 as BoE Rate Cut in Focus – Pound May Get Weaker
On Monday, the EUR/GBP pair dropped to around 0.8707, losing over 0.20% during the day. This fall comes just before the Bank of England (BoE) is expected to announce a rate cut on Thursday, August 7.
Most experts believe the BoE will cut interest rates by 25 basis points, lowering it to 4.00%. If this happens, it will be the fifth cut in a row. The BoE is under pressure due to high inflation, rising taxes, slower consumer spending, and a weak job market.
Inflation in June was still high at 3.6%, above the BoE’s 2% target. Also, wage growth is slowing, and more people are losing jobs. These signs show that the UK economy is slowing down, and a rate cut might help.
Some members of the BoE want a bigger cut of 50 basis points, while others prefer no change. BoE Governor Andrew Bailey has said the bank should move “slowly and carefully,” suggesting only small changes are likely.
Right now, traders are watching the EUR/GBP forecast closely. The fall in the pair might not continue for long, especially if the BoE sounds soft on policy.
Impact:
EUR/GBP might go up if the BoE cuts rates. The British Pound could weaken, and traders may see more volatility in this currency pair.