EUR/GBP consolidates above mid-0.8300s, remains close to three-week low set on Monday

• EUR/GBP holds steady above a multi-week low touched the previous day.
• BoE’s hawkish stance continues to underpin the GBP and cap spot prices.
• Monday’s upbeat UK/Eurozone PMIs contribute to subdued price action.

The EUR/GBP cross oscillates in a narrow trading band during the Asian session on Tuesday and remains well within striking distance of a nearly three-week low, around the 0.8345 region touched the previous day.

The British Pound (GBP) continues with its relative outperformance on the back of the Bank of England's (BoE) hawkish stance, which, in turn, is seen as a key factor acting as a headwind for the EUR/GBP cross. In fact, the UK central bank warned against assumptions for interest rate cuts and also increased its forecast for a peak in inflation this year. This suggests that the BoE will lower borrowing costs more slowly than other major central banks.

Adding to this, mostly above-consensus UK PMIs released on Monday turn out to be another factor underpinning the GBP. The S&P Global's services PMI rose to 53.2, marking a notable uptick from the previous month's final print of 51. Adding to this, the composite PMI came in at 52 compared to February's 50.5 and marked the biggest rise in six months. This helped offset the dismal Manufacturing PMI, which slumped to 44.6 in March from the 46.9 previous.

Meanwhile, the flash PMI showed on Monday that Eurozone business activity accelerated at its fastest pace in seven months in March. The data tempers hope for a more aggressive policy easing by the European Central Bank (ECB), which, along with subdued US Dollar (USD) price action, lends some support to the shared currency. This warrants some caution before placing fresh bearish bets around the EUR/GBP cross and positioning for further losses.