EUR/GBP appreciates to near 0.8350, eyes on ECB officials

• EUR/GBP gains ground ahead of ECB speeches by Philip Lane and Piero Cipollone on Friday.
• The Euro could face challenges as the ECB is expected to deliver another rate cut in October.
• Sterling is receiving support as the BoE is expected to cut rates more gradually compared to other central banks.

EUR/GBP is recovering recent losses from the previous session, trading around 0.8340 during Asian hours on Friday. However, further gains could be limited as the euro’s performance against major currencies remains weak amid growing speculation that the European Central Bank (ECB) may cut its deposit rate for a second consecutive month next month. This would mark the ECB’s third accommodative move this year.

The ECB’s chief economist, Philip Lane, is likely to deliver opening remarks at a conference focusing on fiscal policy, financial sector policy and economic growth in Dublin, Ireland. Meanwhile, ECB board member Piero Cipollone will deliver a keynote speech at the “Payments Economy XIII” conference organized by the Austrian Central Bank.

According to a Reuters report, HSBC economists expect the ECB to cut interest rates by 25 basis points at each meeting from October to next April. Meanwhile, Societe Generale economist Anatoli Annenkov suggested there was a case for anticipating rate cuts, indicating a preference for more aggressive action early in the easing cycle.

On the GBP side, expectations that the Bank of England’s (BoE’s) rate cut cycle is likely to be slower than the ECB’s should continue to support the pound sterling (GBP) and put downward pressure on the EUR/GBP cross .

The BoE allocated 37.059 billion pounds ($49.52 billion) in seven-day funds during its weekly short-term repo on Thursday, down from last week’s record of 44.523 billion pounds. Repos, or repurchase agreements, allow banks to temporarily exchange government bonds for central bank cash, helping to keep market interest rates in line with the BoE’s policy rate, according to Reuters.