Ella 
EUR/GBP pared intraday gains to trade around 0.8430 during the European session on Wednesday following the release of HCOB Purchasing Managers’ Index (PMI) data from the Eurozone and Germany. The Eurozone services PMI fell to 52.9 in August from the previous reading of 53.3. At the same time, the composite PMI fell to 51.0, lower than expected and the previous value of 51.2.
Germany’s August HCOB services PMI fell to 51.2, slightly lower than market expectations of 51.4 and unchanged from the previous value. Meanwhile, the composite PMI also fell to 48.4, slightly below expectations and the previous reading of 48.5.
However, EUR/GBP’s upside potential may be limited as the euro may face challenges amid strong expectations that the European Central Bank (ECB) will cut interest rates in September. It would be the ECB’s second rate cut since it began its shift toward policy normalization in June. Policymakers remain confident that inflation will gradually return to the bank’s 2% target by 2025.
Traders do not expect the Bank of England (BOE) to cut interest rates at its September meeting, which could put pressure on EUR/GBP. However, traders expect the Bank of England to cut interest rates by 25 basis points at its November meeting.
Weak PMI data from the world’s two largest economies heightened concerns about the global economy. Traders will keep a close eye on UK PMI data later in the day.
