EUR/GBP Pressured Below 0.8400 as Weak Eurozone Data Fuels ECB Rate Cut Bets

EUR/GBP Is Still Under Pressure Below 0.8400 After Lackluster Eurozone Figures

The Euro remains under pressure against the British Pound on Wednesday, with the EUR/GBP pair trading flat below the 0.8400 psychological threshold. The pair is hovering just above 0.8380, a multi-week low, as weak Eurozone economic data continues to weigh on sentiment and reinforce expectations of a European Central Bank (ECB) rate cut in June.

German labor market data released earlier today failed to inspire confidence. While the unemployment rate held steady at 6.3%, the number of unemployed rose by 34,000—more than triple the 11,000 rise forecasted by economists. This adds to growing concerns that the Eurozone’s largest economy is struggling to build momentum.

Meanwhile, consumer spending in France offered a mixed signal. Although April’s 0.3% increase in household consumption reversed a sharp 1.1% drop in March, the figure still fell short of the 0.8% gain expected by markets. Additionally, the Q1 GDP figure was confirmed at a tepid 0.1% growth rate, while Nonfarm Payrolls also missed expectations.

These indicators paint a picture of a fragile Eurozone recovery and provide further justification for the ECB to consider a rate cut at its upcoming June meeting—a view that has been reinforced by recent dovish remarks from ECB officials.

On the other hand, the British Pound continues to enjoy relative strength, underpinned by robust UK consumption and persistent inflation. These conditions reduce the likelihood of additional monetary easing from the Bank of England in the near term, adding to the downside pressure on EUR/GBP.

With the economic divergence between the Eurozone and the UK growing more apparent, traders are now watching for any new data or central bank comments that could shift expectations before the ECB’s key policy decision next month.