EUR/GBP weakens to near 0.8500 ahead of Eurozone Consumer Confidence

• EUR/GBP softens to around 0.8515 in Friday's early European session.
• France's Macron said If the US 10% tariff stays, Europe will respond by imposing an equivalent on US firms.
• Stronger UK economic data underpins the Pound Sterling, but the BoE's dovish tone might cap the GBP's upside. 

The EUR/GBP cross loses traction to near 0.8515 during the early European session on Friday. The Pound Sterling (GBP) strengthens against the Euro (EUR) despite growing concerns over the UK labor market and a slight slowdown in consumer inflation expectations. Traders brace for the Eurozone Consumer Confidence report, which is due later on Friday. 

The European Commission President, Ursula von der Leyen, said on Thursday that the EU is ready for a trade deal with US President Donald Trump. However, tariff talks could fail and say, "All options remain on the table."

French President Emmanuel Macron said late Thursday that he favors a speedy and equitable EU-US trade agreement. Nonetheless, if the US 10% tariff stays, Europe will retaliate by imposing an equivalent levy on US companies. Tariff uncertainty triggered by Trump could weigh on the shared currency in the near term. 

The UK June flash S&P Global Purchasing Managers' Index (PMI) data reported earlier this week also supported the GBP. The S&P Global UK Composite PMI rose to 50.7 in June from 50.3 in May, above the consensus of 50.5. Meanwhile, the services sector, which dominates the UK economy, registered its fastest growth in three months and outperformed its German and French counterparts in June. This, in turn, lifts the GBP and acts as a headwind for the cross.

However, the dovish tone from the Bank of England (BoE) could limit the GBP's upside. BoE Governor Andrew Bailey warned earlier this week that there were now signs that the UK labor market was softening, and he emphasized his view that interest rates are likely to continue falling.