• EUR/GBP trades in positive territory on Tuesday, supported by a modest rebound of the Euro against the Pound Sterling.
• Comments from ECB officials confirm a scenario of monetary stability, although this limits the upside potential for the single currency.
• Rising political uncertainty in the UK weighs on the Pound Sterling, as investors fear looser fiscal discipline.

EUR/GBP trades around 0.8715 on Tuesday at the time of writing, up 0.15% on the day. The cross draws moderate support from the Euro (EUR), although the single currency’s momentum remains broadly contained by the latest signals from the European Central Bank (ECB).

In the Eurozone, the Euro (EUR) struggles to find a clear catalyst following recent remarks from ECB President Christine Lagarde. She reiterated her confidence that inflation will sustainably return to the 2% target over the medium term, a message consistent with last week’s monetary policy communication. This stance reinforces expectations of a prolonged period of stable interest rates, limiting the scope for additional support for the single currency.

The Euro nevertheless receives some marginal support from comments by Luis de Guindos, Vice President of the ECB. He said that current interest rates remain appropriate and stressed the need for policymakers to remain open-minded regarding future decisions. He also noted that the recent appreciation of the Euro is “not dramatic” and that the inflation trend remains broadly in line with the central bank’s projections.

On the UK side, the Pound Sterling (GBP) is under pressure amid rising political uncertainty. UK Prime Minister Keir Starmer is facing growing calls to resign following his decision to appoint Peter Mandelson as the UK ambassador to the United States (US), a move that has drawn criticism due to Mandelson’s controversial past links. Despite the mounting pressure, Keir Starmer has ruled out stepping down, saying he is not prepared to walk away and has received public backing from several senior Cabinet members.

Investors remain cautious, increasingly wary that a potential change in leadership could raise the risk of looser fiscal discipline and higher government borrowing. Against this backdrop, market focus in the UK now turns to upcoming macroeconomic data releases, including Gross Domestic Product (GDP), Industrial Production and Manufacturing Production figures due on Thursday, which could further influence the Pound Sterling and, by extension, EUR/GBP price action.