EUR/GBP holds below 0.8350 ahead of ECB's Lagarde speech

• EUR/GBP weakens to near 0.8335 in Thursday's early European session. 
• Traders expect the ECB to deliver rate cuts twice more to around 2% by December.
• Odds of a BoE rate cut strengthen as UK inflation eased to 2.8%. 

The EUR/GBP cross remains on the defensive around 0.8335 during the early European session on Thursday. The Euro (EUR) weakens against the Pound Sterling (GBP) amid the uncertainty surrounding US President Donald Trump's tariff policies and growing expectations that the European Central Bank (ECB) would cut interest rates again. Traders will take more cues from the ECB's President Lagarde speech later on Thursday. 

The European Union's trade commissioner, Maros Sefcovic, met with Trump's top trade officials on Tuesday to try to avoid steep US tariffs on EU goods next week, but the outcome was unclear. Investors will closely monitor the developments surrounding Trump's trade policies. The easing fears of trade tensions could help limit the EUR's losses. 

According to LSEG data, traders expect the ECB to cut rates twice more to around 2% by December. They then price a small chance of a rate hike by September 2026. ECB Governing Council Francois Villeroy de Galhau said late Tuesday that there is still room to lower interest rates further, and the 2.5% deposit rate could fall to 2% by the end of the summer.

The UK inflation slowed more than expected in February, boosting the odds of the Bank of England (BoE) cutting interest rates in May. This, in turn, might drag the GBP lower and create a tailwind for the cross. 

The headline CPI rose 2.8% YoY in February, compared to 3.0% in January, the Office for National Statistics reported Wednesday. This reading came in softer than the 2.9% expected. The Core CPI, which excludes the volatile prices of food and energy, climbed 3.5% YoY in February versus 3.7% prior, below the market consensus of 3.6%.