EUR/GBP steadies above 0.8600 as Trump pushes Ukraine talks

• EUR/GBP holds steady near 0.8635 in Tuesday's early European session.
• US moves to set a Putin-Zelenskiy meeting after talks with both.
• Traders trim bets on a final BoE rate cut this year, pricing in below a 50% chance of another reduction.

The EUR/GBP cross trades on a flat note around 0.8635 during the early European session on Tuesday. In the absence of top-tier economic data released from the Eurozone and the United Kingdom (UK) on Tuesday, traders will keep an eye on the developments surrounding a possible resolution of the Ukraine-Russia war after the US-Ukraine summit.  

On Monday, Trump and Ukrainian President Volodymyr Zelenskiy met at the White House to discuss a path to ending Russia's war in Ukraine. US President said that the US would "help out" Europe in providing security for Ukraine as part of any deal to end the war and expressed hope that Monday's summit could eventually lead to a trilateral meeting with Russian President Vladimir Putin. Peace hopes imply lower energy costs and reduced geopolitical uncertainty in the Eurozone, which generally provides some support to the shared currency. 

The European Central Bank's (ECB) President Christine Lagarde's speech will be the highlight on Wednesday. The remarks from ECB policymakers might offer some hints about the interest rate path in the Eurozone. Forward contracts on the ECB's official overnight benchmark interest rate, the euro short-term rate (ESTR), imply around a 60% possibility of a 25 basis point rate cut (bps) by March, and a deposit rate of 1.92% in December 2026.

The attention will shift to the UK July Consumer Price Index (CPI) inflation data, which is due later on Wednesday. The headline and core CPI are expected to show an increase of 3.7% YoY in July. Any signs of hotter inflation could complicate the Bank of England's (BoE) path to cutting interest rates further and might weigh on the GBP.

Money markets are betting the UK central bank will keep interest rates on hold at 4% for the rest of this year as signs of faster inflation and a more resilient economy reduce the case for more reductions. Traders decreased wagers on another quarter-point rate cut this year, with swaps implying less than a 50% odds of such a move.