EUR/GBP strengthens above 0.8650 as traders raise bets on BoE rate cut

• EUR/GBP trades on a positive note around 0.8655 in Friday's early European session. 
• Investors remain confident that the BoE will cut rates next month after the Unemployment Rate rose to a four-year high.
• The ECB is expected to wait until December to make the final rate cut. 

The EUR/GBP cross gains ground to near 0.8655 during the early European session on Friday. The Pound Sterling (GBP) edges lower against the Euro (EUR) as the UK Unemployment Rate hits the highest level in four years. Traders await the German Producer Price Index (PPI) and the Eurozone Current Account, which will be published later on Friday. 

The UK Unemployment Rate ticked higher to 4.7% in the three months to May versus 4.5% prior, the UK Office for National Statistics reported on Thursday. This figure came in below the expectations of 4.6% during the reported period. Analysts expect the UK jobs market to continue to weaken, making the prospect of a Bank of England (BoE) interest rate cut next month even more likely. This, in turn, could exert some selling pressure on the GBP in the near term. 

Money markets are now pricing in nearly an 89% odds that the UK central bank will lower borrowing costs in August, up from an 87% chance on Wednesday. Analysts expected the BoE to deliver two interest rate reductions by the end of the year, which would take the bank rate down to 3.75%.

On the Euro front, the European Central Bank (ECB) is anticipated to delay its final interest-rate cut until December without investors concluding in the meantime that easing is over, a Bloomberg survey of economists showed. ECB President Christine Lagarde stated that the central bank is in a "good place" to navigate any challenges to economic growth and inflation that may arise. However, there's less of a consensus beyond the summer. Traders see a less than 50% possibility of a reduction in September. A rate cut is almost fully priced by year-end.