EUR/GBP moves away from multi-week low, lacks bullish conviction and remains below mid-0.8500s

• EUR/GBP looks to build on Friday's bounce from the 0.8500 neighborhood.
• Hopes for a UK-US trade deal favor the GBP bulls and might cap the cross.
• The divergent BoE-ECB policy expectations could further act as a headwind.

The EUR/GBP cross attracts some buyers during the Asian session on Monday, though it lacks bullish conviction and remains close to a nearly three-week low around the 0.8510 region touched on Friday. Spot prices currently trade just below mid-0.8500s, up less than 0.10% for the day.

The British Pound's (GBP) relative underperformance against its European counterpart could be attributed to comments from the UK Finance Minister Rachel Reeves, stating that Britain's government is not in a rush to secure a trade deal with the US. This, in turn, is seen as a key factor acting as a tailwind for the EUR/GBP cross. Investors, however, remain hopeful that the UK will strike a deal with the US.

Adding to this, data released on Friday showed that UK Retail Sales unexpectedly rose by 0.4% in March following the previous month's downwardly revised growth of 0.7%. This, along with expectations that the Bank of England (BoE) will cut interest rates more slowly than other major central banks, including the European Central Bank (ECB), should limit the GBP losses and cap the upside for the EUR/GBP cross.

The ECB earlier this month warned that economic growth will take a big hit from US tariffs and bolstered the case for further policy easing in the months ahead. This, in turn, warrants some caution before placing fresh bullish bets around the EUR/GBP cross and confirming that the recent corrective pullback from the 0.8735-0.8740 area, or the highest level since November 2023 touched earlier this month, has run its course.