EUR/GBP edges lower below 0.8450 on dovish ECB tone

• EUR/GBP slumps to near 0.8435 in Monday's early European session. 
• BoE sticks to a cautious path, supporting the GBP.
• Traders raise their bets on ECB rate reductions this year. 

The EUR/GBP cross extends the decline to around 0.8435 during the early European session on Monday. The Pound Sterling (GBP) strengthens against the Euro (EUR) due to positive developments surrounding the United States (US) and the United Kingdom (UK) trade agreement last week. Trader will focus on the speeches of the Bank of England (BoE) policymakers, including Megan Greene,  Catherine Mann and Alan Taylor. 

US President Donald Trump last week said that he will continue to impose a new 10% tariff on imports of most British goods but will reduce higher tariffs on imports of British cars, steel and aluminium. These positive developments surrounding the US-UK trade deal lift the GBP and act as a headwind for the cross. 

A gradual and careful policy-easing approach by the BOE contributes to the GBP's upside. The UK central bank cut interest rates by a quarter percentage point in a divided decision last week and suggested that the growth risks posed by Trump's global trade war haven't derailed its plan to ease policy only cautiously. The BoE estimated the UK economy to grow at a faster pace of 1%, up from 0.75% projected in the February meeting.

On the Euro's front, growing expectations of further interest rate cuts by the European Central Bank (ECB) weigh on the shared currency. Furthermore, ECB Governing Council member Olli Rehn said on Friday that the central bank should cut its interest rate next month if its new forecasts confirm an outlook of disinflation and waning growth momentum.