- EUR/GBP remains stronger after the widely expected ECB’s 25 basis point rate cut on Thursday.
- The ECB reiterated its commitment to stabilizing inflation at its 2% medium-term target, while maintaining a data-dependent, meeting-by-meeting policy approach.
- UK exporters face a previous 20% tariffs as Trump exempted the UK from the steep 50% US tariffs.
EUR/GBP extends its gains for the third consecutive day, trading around 0.8430 during the Asian hours on Friday. The currency cross remained stable after the European Central Bank (ECB) delivered a widely expected 25 basis point rate cut on Thursday, and reduced interest rates to 2.0% from 2.25%.
In its accompanying statement, the European Central Bank (ECB) ensured to stabilize inflation at the central bank’s 2% medium-term target. The ECB reiterated that a data-dependent and meeting-by-meeting approach will be followed to determine monetary policy stance, especially in current conditions of exceptional uncertainty.
Moreover, ECB President Christine Lagarde said in a post-meeting press conference that monetary policy is “well-positioned,” while the current uncertain outlook is more than usual. Lagarde also added that the central bank is close to ending the easing cycle.
Moreover, ECB policymaker Madis Muller noted that he “agrees with President Christine Lagarde that the cycle is almost finished.” On Friday, ECB policymaker Martins Kazaks said, “It may well be the case that we pause in July.” Kazaks also noted that inflation has been below 2% for some time, but remains vigilant.
The EUR/GBP cross may face challenges as the Pound Sterling (GBP) could receive support from increased risk sentiment. Market sentiment in the United Kingdom (UK) improves as US President Donald Trump signed an executive order on Tuesday, granting temporary relief to UK exporters from the steep 50% US tariffs on steel and aluminum. The UK still faces the previous 25% tariff rate.
