Markets await Germany’s preliminary inflation data and BoE Governor Bailey’s remarks amid shifting rate hike expectations.
The EUR/GBP pair edged lower to 0.8660 in early European trading, reflecting cautious sentiment ahead of key economic releases. Germany’s preliminary inflation data and Bank of England Governor Andrew Bailey’s speech are expected to drive near-term volatility.
Traders are pricing in a 91% chance of a 25 basis point ECB rate hike on June 11, lifting the deposit rate to 2.25%. Odds of another hike in September stand at 50%. ECB’s Isabel Schnabel signaled support for a June move regardless of Middle East developments.
Weaker UK economic data and rising energy costs have weighed on GBP, with traders reducing BoE rate hike expectations for 2026. Geopolitical tensions in the Strait of Hormuz add further pressure on UK consumer spending and monetary policy outlook.