The EUR/GBP cross extends its downside to near 0.8490 during the early European session on Tuesday. The Euro (EUR) softens against the Pound Sterling (GBP) due to the dovish remarks from the European Central Bank (ECB). Traders brace for the speech by Bank of England (BoE) official Dave Ramsden later on Tuesday.
Earlier this month, the ECB cut the interest rates for the seventh time in a year, warning that US tariffs would negatively impact economic growth. This strengthens the case for additional rate reductions in the coming months and puts the EUR bulls on the defensive. ECB policymaker Olli Rehn said on Monday that the central bank may cut interest rates below the neutral level that keeps the economy in balance.
Traders are now pricing around a 75% odds of a June rate cut, up from roughly 60% before the ECB’s decision, according to LSEG data. Nonetheless, given that the decision was still more than a month away and economic policy had become unpredictable since Donald Trump’s April 2 announcement.
On the GBP’s front, UK Retail Sales rose in March, failing to challenge expectations of a Bank of England (BoE) rate cut in May amid growing economic uncertainty tied to tariffs. The UK Retail Sales increased 0.4% MoM in March versus a rise of 0.7% prior. This figure came in above the market consensus of a decline of 0.4%.
