Ella 
EUR/GBP continued its uptrend and broke through the 0.8600 mark.
Retail sales in the euro zone were mixed in June, with German factory orders rising 3.0% year-on-year from -4.4% previously.
Investors were awaiting data on the euro zone’s Harmonized Consumer Price Index and the UK’s second-quarter year-on-year gross domestic product (GDP) data.
In the early trading hours of the Asian market on Monday, the EUR/GBP fork momentum was strong, rising for the sixth consecutive day. Market participants are awaiting data on euro zone inflation and UK growth due later on Tuesday and Friday respectively. EUR/GBP is currently trading around 0.8631, down 0.02% on the day.
According to the latest data from the Deutsche Bundesbank, German factory orders increased by 3.0% on an annual basis, compared with -4.4% in the previous period; the monthly rate increased by 7.0%, from 6.2% in the previous period, and the market expected -2.0%. June retail sales in the euro zone were mixed. The monthly data fell to -0.3% vs. 0.2% expected vs. 0.6% previously; but the annual figure rose to -1.4% vs. -1.7% expected vs. -2.4% previously.
In addition, last Thursday announced that the producer price index (PPI) in the euro zone fell to the lowest level in three years in June. The month-on-month decrease was -3.4%, expected -3.1%, and the previous value -1.6%. The Eurozone HCOB Composite PMI fell to 48.6 from 48.9. The Services PMI fell to 50.9 from 51.1 in July.
The European Central Bank raised interest rates by 25 basis points to 4.25% last week. European Central Bank President Christine Lagarde said the central bank will strive to achieve its medium-term inflation target of 2%. The European Central Bank maintained its hawkish stance and boosted the euro against major currency pairs.
Bank of England (BOE) Chief Economist Huw Pill said on Friday that interest rates are expected to remain high for an extended period of time. Peel added that the central bank will become more data-dependent and policymakers will follow the economic and data developments.
It is worth noting that the Bank of England (BOE) raised interest rates by 25 basis points (bps) from 5% to 5.25% at its August policy meeting last Thursday, a 15-year high. Markets expect the Bank of England to raise interest rates two more times before the end of the year due to stubbornly high inflation. However, the headline UK consumer price index (CPI) fell sharply to 7.9% in June from 8.7% in May, which may require the Bank of England to slow down the pace of rate hikes.
Bank of England Governor Andrew Bailey said in his policy outlook that the central bank expects inflation to fall to around 5% in October. Bailey added that no assumptions were made about the future path of interest rates. Still, the gloomy economic outlook and lingering fears of a UK recession weighed on sterling and acted as a tailwind for EUR/GBP.
Looking ahead, market participants will take their cue from Tuesday’s release of the annual rate of the July Harmonized Consumer Price Index for the euro zone. Market focus will turn to Friday’s preliminary UK second-quarter gross domestic product year-on-year. These data could provide a signal for a clear direction for EUR/GBP.
