• EUR/GBP trades without a clear direction as markets adopt a wait-and-see stance ahead of key central bank decisions.
• The European Central Bank is expected to hold rates, although tightening expectations persist
• The Bank of England is also likely to remain on hold, with UK employment data in focus.

EUR/GBP trades around 0.8640 on Tuesday at the time of writing, virtually unchanged for the day, as investors remain on the sidelines ahead of the European Central Bank (ECB) and the Bank of England (BoE) monetary policy decisions due on Thursday.

On the European side, the ECB is widely expected to keep its deposit rate unchanged at 2%. However, money markets continue to price in the possibility of a rate hike by mid-year, with some policymakers, including Peter Kazimir, highlighting upside risks to inflation linked to geopolitical tensions.

The BoE is also expected to leave its key rate unchanged at 3.75%, amid persistent economic uncertainty. Investors anticipate a relatively hawkish tone, as inflation risks remain present, particularly in the event of renewed increases in energy prices.

Also on Thursday, ahead of these decisions, attention will turn to UK labor market data. The International Labour Organization (ILO) Unemployment Rate is expected to remain steady at 5.2%. Any upside surprise could support the Pound Sterling (GBP), while weaker data could reinforce expectations of future monetary easing.

On the fundamental side, the Euro (EUR) is supported by the decline in Oil prices, a positive factor for the Eurozone given its heavy reliance on energy imports. Easing supply concerns, with tankers safely crossing the Strait of Hormuz and signals of potential strategic reserve releases, are contributing to an improved economic outlook for the region.

In this context, EUR/GBP remains in a consolidation phase, with traders awaiting clearer signals from central banks before committing to a directional move.