EURGBP rose uncharacteristically on Friday

EUR/GBP rose unusually on Friday as risks of a broader conflict between Israel and Iran eased. In addition, it is seen that inflation will decrease sharply to the target level in the coming months, sending a dovish signal to the market.

The bank needs to remain restrained in its policy stance. However, he echoed Ramsden's comments by saying that the committee is seeing signs of a downward shift in the persistent component of inflation dynamics.

EUR/GBP appears to have found resistance around 0.8625 and has traded lower after the PMI data, even heading lower than the 200 SMA. A return to former channel resistance is potentially on the cards at 0.8578. Prices settled into the trading range as central bankers mulled incoming data and the prospect of a first rate cut appeared a fair distance away.

Longer-term, the ECB is on track to cut rates in June, meaning sterling will extend its interest rate superiority and is likely to see the pair test familiar levels of support.

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