EUR/GBP trades around 0.8450 after paring losses, weighing comments from ECB policymakers

• EUR/GBP recovers daily losses following comments from ECB policymakers.
• ECB Governing Council member Bostjan Vasle said the central bank is not committed to any predetermined rate path.
• The BoE is expected to offer further rate cuts following slowing UK wage growth and flat GDP data.

EUR/GBP recovers intraday losses, trading around 0.8430 in early European hours on Friday. However, the EUR/GBP cross faced challenges following the European Central Bank’s (ECB) interest rate decision on Thursday.

The ECB cut the Main Refinancing Operations Rate to 3.65% with a rate cut of 60 basis points (bps), beating market expectations of a 25 basis point cut. Additionally, in an interview with Deutschlandfunk on Friday morning, ECB policymakers and Bundesbank President Joachim Nagel noted that “core inflation is also moving in the right direction.” Nagel expects the inflation target to be reached at the end of next year.

ECB Governing Council member Bostjan Vasle said on Friday that “we are not committed to any predetermined rate path”. Vasle also noted that inflation will be largely driven by core and services inflation. Meanwhile, ECB policy makers Olli Rehn stressed that future policy decisions will continue to be based on an assessment of the inflation outlook, with current uncertainties underscoring the importance of relying on fresh economic data.

Traders are anticipating further interest rate cuts from the Bank of England (BoE), particularly after this week’s data indicated a slowdown in UK wage growth and a steady GDP print for the second straight month in July. These economic signals have strengthened expectations for more easing measures from the BoE.

Friday’s eurozone industrial production is expected to fall 0.3% month-on-month in July, after a previous drop of 0.1%. Meanwhile, annual data is expected to show a 2.7% decline, an improvement on the previous 3.9% decline. As for the UK, consumer inflation expectations will be taken into account.