EUR/GBP advances towards 0.8640 ahead of eurozone HICP and UK PMI
- EUR/GBP is aiming to capture 0.8640 as the focus shifts to the odds of first rate hike by the ECB.
- The eurozone HICP is expected to elevate to 8.3% from the prior print of 8.1%.
- The UK economy is operating at the highest inflation rate at 9.1% vs. its G7 peers.
The EUR/GBP pair is expected to display a minor correction as the cross has scaled northwards swiftly in the Asian session. However, the upside remains favored as the cross as witnessed a responsive buying action after hitting a low of 0.8511 on Thursday. The asset has overstepped Thursday’s high at 0.8620 and is attempting to sustain confidently above the same.
The eurozone bulls are performing well against sterling despite higher expectations for the eurozone Harmonized Index of Consumer Prices (HICP). As per the market consensus, an escalation is expected in the inflation rate to 8.3% from the prior print of 8.1%. Thanks to the soaring energy bills and food prices that have resulted in a large real income shock for the households in Europe.
On a broader note, the shared currency bulls are performing better against pound on advancing hopes of a rate hike by the European Central Bank (ECB) in its July monetary policy meeting. It is worth noting that the ECB has yet not followed the footprints of Western leaders and will announce its first rate hike in 11 years.
Meanwhile, the pound is underperforming as investors are trimming the demand forecasts. The UK economy has reported the highest inflation rate at 9.1% in comparison with its G7 peers. No doubt, the households in the UK economy would be facing the extreme consequences of diminished value ‘paychecks’. In today’s session, the IHS Markit will report the UK Manufacturing PMI, which is expected to remain stable at 53.4.