• EUR/GBP softens to around 0.8620 in Friday’s early European session. 
• The Bank of England held interest rates at 3.75% on Thursday. 
• ECB kept key interest rates unchanged at its March meeting as heightened geopolitical tensions weigh on the outlook for inflation and the economy. 

The EUR/GBP cross loses traction to near 0.8620 during the early European session on Friday. The Pound Sterling (GBP) edges higher against the Euro (EUR) after monetary policy decisions from both the Bank of England (BoE) and the European Central Bank (ECB).

The BoE kept interest rates steady at 3.75% at its March meeting on Thursday, as widely expected. BoE Governor Andrew Bailey said that the Middle East conflict will cause a “shock to the economy” that will push up inflation in the near term, adding that restoring safe shipping through the Strait of Hormuz is key to addressing energy price rises. 

The ECB decided to keep interest rates on hold at its latest monetary policy meeting on Thursday, saying the war in Iran has made the outlook “significantly more uncertain.” Policymakers said the conflict had created “upside risks for inflation and downside risks for economic growth,” prompting traders to up bets on potential ECB rate hikes later this year.

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