25 Mar 2025

EUR/GBP remains steady above a multi-week low established the previous day. The Bank of England's (BoE) hawkish stance continues to bolster the British Pound (GBP) and restrict spot prices. The positive Purchasing Managers' Index (PMI) figures from the UK and Eurozone released on Monday contribute to the overall restrained price movement. During the Asian trading session on Tuesday, the EUR/GBP pair fluctuates within a limited range, remaining close to a nearly three-week low around the 0.8345 level noted the day before.

The British Pound is exhibiting relative strength, supported by the BoE's assertive outlook, which plays a crucial role in creating resistance for the EUR/GBP pair. The UK central bank has warned against assumptions of imminent interest rate cuts and has revised its inflation peak forecast for this year upward. This suggests that the BoE is likely to lower borrowing costs at a slower rate compared to other major central banks.

Moreover, the UK PMIs released on Monday, which largely surpassed expectations, further reinforce the GBP. The S&P Global services PMI rose to 53.2, a notable increase from the previous month's final figure of 51. Additionally, the composite PMI recorded at 52, up from February's 50.5, represents the largest increase in six months. This encouraging data helps alleviate the effects of the disappointing Manufacturing PMI, which declined to 44.6 in March from 46.9 previously.

Conversely, the flash PMI released on Monday revealed that Eurozone business activity expanded at its fastest pace in seven months during March. This information reduces expectations for a more aggressive policy easing by the European Central Bank (ECB) and, coupled with the subdued performance of the US Dollar (USD), offers some support for the euro. Therefore, caution is warranted before establishing new bearish positions on the EUR/GBP pair and anticipating further declines.