Ella 
EUR/GBP traded above 0.8540 in Asia on Tuesday, rising for the third consecutive day. Market participants awaited U.K. and euro zone inflation data for fresh impetus before preparing for a speech by ECB President Christine Lagarde on Friday.
On Monday, Germany’s PPI in July fell to -6%, the previous value increased by 0.1%, and the market expected -5.1%. The monthly PPI fell to -1.1%, lower than the market consensus of -0.2% and the previous value of -0.3%. In addition, Germany’s “Bubba Monthly Report” shows that inflation may remain above the central bank’s target for a longer period of time. Investors took hawkish bets on the European Central Bank due to upside risks to inflation, pushing the euro higher against major currencies.
On the other hand, traders expect the Bank of England (BOE) to tighten monetary policy further, raising interest rates by 25 basis points (bps) to 5.50% at its September meeting. Concerns about aggressive rate hikes by the Bank of England could weigh on the pound as investors fear the UK economy could be negatively impacted after 14 consecutive rate hikes. However, upbeat UK GDP and CPI data increased the likelihood of further policy tightening by the BoE.
Later in the week, Eurozone current account, S&P Purchasing Managers Index, German Q2 GDP will be released this week. The UK is to publish PMI, GFK Consumer Confidence Index. ECB President Christine Lagarde will provide further guidance on monetary policy. This event will determine the clear direction of EUR/GBP.
