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Euro Pound Sterling (EUR/GBP) Exchange Rate Rises as Investors Fret Over BoE Rate Cut

Euro Pound (EUR/GBP) Exchange Rate Edges Higher as Markets Focus on BoE

The Euro Pound Sterling (EUR/GBP) exchange rate edged up slightly, leaving the pairing trading at around £0.8549.

Due to a lack of data from both the UK and Eurozone, market attention has shifted to the near-term outlook for UK monetary policy.

The Pound edged lower at the start of the week as investors were cautious ahead of this month’s Bank of England (BoE) meeting.

Markets expect that the BoE may slash rates if UK business surveys released later in the week disappoint.

Expectations the bank will cut interest rates stands at around 70%, skyrocketing from just a 10% chance of a quarter-point cut just a week ago.

Meanwhile, this week will see the European Central Bank’s (ECB) first meeting of the year.

It is expected the meeting will launch a strategy review, including a rethink of the inflation goal the bank has consistently been unable to meet since 2013.

Le Maire: Strikes to Hurt French Economy

The single currency was able to edge up against Sterling despite reports revealing the strikes in France are expected to cause the economy to contract by -0.1% over one quarter.

On Monday French Economy Minister, Bruno Le Maire stated that the current wave of strikes are likely to hurt the economy.

While he did not specify which quarter he was talking about, he told LCI television:

‘There will be an impact but it will be, I think, limited. Today estimates available show that the impact would be of a 0.1 points on growth on a quarter. On the whole year, it is a very limited impact.’

Euro Pound Outlook: Will Weak UK Employment Data Send GBP Lower?

Looking ahead to this evening, the Euro (EUR) could suffer losses against the Pound (GBP) following a speech from the European Central Bank’s (ECB) President Christine Lagarde.

If Lagarde mentions monetary policy and her tone is overly dovish, the single currency will be left under pressure.

Meanwhile, the pairing could regain losses if UK employment data disappoints on Tuesday.

If average earnings are lower than expected in November, the Euro Pound (EUR/GBP) exchange rate will edge up.