The EUR has some new reasons for weakness after the last batch of PMI data points released on the 23rd of June.
The German June PMI flash readings came in below the market’s minimum expectations as did the Eurozone’s composite and services PMI’s. A slowing Eurozone economy can make the ECB more gradual on any rate hiking.
The Bank of England by contrast has already stated hiking interest rates and now looks like pausing in 2023 as growth is expected to turn negative. However, the more recent revelation that the euro economy is potentially heading towards a recession should allow the EURO to weaken against the GBP.
The diverging outlook between the ECB and the BoE should keep the EURGBP pressured on any rallies higher.
Major Trade Risks: The major risk here is if there is shift in monetary policy outlook from either the ECB or the BoE.