Investing.com — On Monday, the pair showed signs that it could rise from its current levels following recent moves in the currency market. The pair, which had fallen below 0.8500, did not have strong bearish momentum, possibly influenced by lower liquidity. Despite volatile inflation and wage data, the market appears reluctant to push the pair lower given increasingly divided opinions among members of the Bank of England’s Monetary Policy Committee (MPC).
The difference in monetary policy between the European Central Bank (ECB) and the Bank of England is seen as the main factor that could drive a rally for the EUR/GBP. Observers note that the policy landscape could shift in favor of the euro in the coming months. Speculation suggests that economic data expected next month could strengthen the case for a Bank of England rate cut in August, which could in turn support a rally between the EUR and GBP.
Despite the ECB’s dovish comments, which would normally weigh on the euro, the currency has remained somewhat isolated thanks to a weakening US dollar. This has particularly affected the EUR/GBP cross as the pound is more sensitive to changes in risk sentiment due to its higher beta.
In Britain, the political scene is relatively muted when it comes to its impact on currency markets. Labor leader Keir Starmer, who is leading in the polls, kicked off his campaign with a speech yesterday. However, this event had no significant market resonance, and currently there is no noticeable risk premium on the EUR/GBP related to British politics.
The upcoming week’s calendar for Britain does not contain any major economic events that are likely to significantly impact the currency pair. Market participants will be paying close attention to any shifts in policy or economic indicators that could impact the trajectory of the EUR/GBP in the near future.
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