ECB is "very clear" about the possibility of a rate cut in June In Europe, EUR/USD rose 0.1% to 1.0677, adding to Wednesday's 0.5% gain, pulling away from a five-month low seen at the start of the month.
Nonetheless, these gains may only be temporary with the European Central Bank now expected to cut interest rates before the Federal Reserve in a bid to give a boost to the region's struggling economies.
The ECB has made it "very clear" that interest rates could be cut in June, ECB Vice President Luis de Guindos said earlier on Thursday, but also stressed that policy decisions beyond that remained unclear.
Markets are currently looking at a 75 basis point cut in the central bank's deposit rate of 4% this year, or two cuts after June.
GBP/USD edged 0.2% higher to 1.2475, trading just above five-month lows after Wednesday's UK inflation data rose at its weakest rate in two and a half years in March.
Bank of England Governor Andrew Bailey said earlier this week that the UK faces less inflation risk than the US, and "this raises the question of why markets are pricing in the same amount of easing this year - 45bp - for both the Fed and the BoE," said analysts at ING.
"We could see these expectations shift in the coming months as more BoE easing is expected. This would be negative for sterling."