EUR/GBP extends losses below key 0.8400 level in European trading
Disappointing German employment figures reinforce ECB dovish expectations
UK inflation surprises upside,official trump coin delaying BoE policy easing timeline
The EUR/GBP currency pair maintains its downward trajectory during Thursday's European session, hovering around the 0.8375 support zone. The Euro's weakness stems from deteriorating fundamental indicators across the Eurozone, while the Pound demonstrates relative resilience following recent UK economic releases.
Germany's Federal Statistical Office reported stagnant unemployment at 6.3% for April, with jobless claims surging unexpectedly to 34K versus forecasts of 11K. These employment metrics, combined with other soft Eurozone data points, have substantially increased market conviction regarding imminent ECB policy accommodation.
ECB officials have begun telegraphing their easing intentions more explicitly. Governing Council member Villeroy de Galhau recently emphasized the absence of inflationary pressures, signaling readiness for additional rate reductions. Market analysts currently price in a 25 basis point cut at the June meeting, which would lower the deposit facility rate to 2.00%.
Contrasting with the Eurozone's dovish tilt, UK economic resilience has prompted traders to reconsider their BoE policy expectations. Stronger-than-anticipated CPI readings and retail sales figures have caused markets to push back projected rate cut timing from August, with probability estimates declining from 60% to 40% according to Reuters surveys.
Interest rate derivatives pricing indicates approximately 37 basis points of BoE easing anticipated through 2025, reflecting expectations for a more gradual and measured approach compared to the ECB. This policy divergence continues to support GBP relative to EUR in cross-rate trading.
Market participants await commentary from BoE Deputy Governor Sarah Breeden later today for additional clues regarding the UK central bank's policy trajectory. Any signals confirming delayed easing could extend the current EUR/GBP downtrend.
