EUR\/GBP fell on Wednesday, with the Euro weakening after reports that ECB President Christine Lagarde may leave before her term ends in October 2027. The pair traded near 0.8723, down about 0.17% on the day.<\/p>\n
The report added uncertainty about Eurozone policy. An ECB spokesperson told Euronews the claim is untrue and said Lagarde has not decided to end her term early.<\/p>\n
The story followed news that Bank of France Governor Fran\u00e7ois Villeroy de Galhau will step down in June before his term ends. On Wednesday he said the ECB has won the battle against inflation, said inflation in France is not too low, and said his decision is personal.<\/p>\n
Sterling stayed firm after mixed UK inflation data and weaker labour market figures released on Tuesday. These releases have strengthened the case for more Bank of England rate cuts.<\/p>\n
UK CPI fell 0.5% month on month in January after a 0.4% rise in December, while annual CPI slowed to 3% from 3.4% and core CPI eased to 3.1% from 3.2%. Output PPI was 0.0% on the month versus 0.2% expected, and eased to 2.5% year on year from 3.1%.<\/p>\n
RPI fell 0.5% month on month after a 0.7% rise, and eased to 3.8% year on year from 4.2% (3.9% forecast). Markets expect a BoE cut in March and nearly two more this year, while the ECB is expected to hold through 2026.<\/p>\n
Focus turns to Friday\u2019s preliminary PMI data for the Eurozone and UK, plus UK Retail Sales.<\/p>\n
We see the current softness in EUR\/GBP as a short-term reaction to political uncertainty at the European Central Bank. The market is pricing in risk following reports about President Lagarde, and this seems to be overshadowing the more important economic fundamentals. This momentary weakness could present an opportunity in the coming weeks.<\/p>\n
The key driver for us remains the policy divergence between the Bank of England and the ECB. With today’s data confirming UK annual inflation has cooled to 3.0%, down significantly from the 4.2% rate we saw in late 2025, the path is clear for BoE rate cuts. In contrast, the latest Eurostat flash estimate for January showed Eurozone inflation holding firmer at 3.3%, reinforcing expectations that the ECB will keep its deposit facility rate at 4.00% for the foreseeable future.<\/p>\n
This divergence suggests we should look at dips towards the 0.8700 level as opportunities to build long positions. Using options could be a smart way to play this, for instance, by buying EUR\/GBP call options with April or May 2026 expiries. This strategy allows us to position for a potential rebound towards our target while limiting our downside risk if the political noise at the ECB gets louder.<\/p>\n
Looking back at the trading patterns from 2025, the pair found significant support around the 0.8650 mark, suggesting the current downward pressure may be limited. We are therefore positioning for a move back towards the 0.8800 level seen in the fourth quarter of last year. All eyes will now be on this Friday’s PMI and UK retail sales figures to confirm if the economic divergence story is still intact.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/GBP slips as Lagarde exit rumours unsettle euro; sterling steadier as UK inflation cools, easing-cuts expectations.<\/p>\n","protected":false},"author":62,"featured_media":17031,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42184","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42184","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42184"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42184\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17031"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42184"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42184"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42184"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}