The EUR/GBP cross remains under pressure, trading around the mid-0.8500s in early European hours on Thursday. Traders are closely watching the European Central Bank (ECB) monetary policy decision, with expectations leaning towards the ECB maintaining the current interest rates at the January meeting. The market reflects a 60% chance of the first rate cut by April, according to Reuters. ECB President Lagarde, in her recent remarks at Davos, hinted that the initial cut might occur in the summer months of 2024, emphasizing a reserved and data-dependent approach.

On the other side, the Bank of England (BoE) is anticipated to keep rates unchanged on February 1, initiating its rate-cutting cycle in August. Market expectations for a BoE rate cut have strengthened due to a considerable drop in inflation since its peak at 11.1% in October 2022, the highest rate in four decades.

Traders will closely monitor the ECB rate decision and seek insights from President Lagarde’s press conference. Lagarde’s speech could offer hints about the future monetary policy direction, providing potential clarity for the EUR/GBP cross.

Trade Idea:

Traders should be vigilant during the ECB rate decision and Lagarde’s speech for potential market-moving cues, guiding the direction of the EUR/GBP cross.