Ella 
EUR/GBP traded within a tight range around 0.8604-24.
Germany’s Harmonized Index of Consumer Prices (HICP) came in at 6.5%, in line with expectations.
Policymakers at the Bank of England (BOE) said they expect interest rates to remain elevated for an extended period of time.
During the European morning session on Tuesday, EUR/GBP traded within a narrow range around 0.8620. Market participants await the UK’s second-quarter gross domestic product (GDP) to provide fresh impetus to the market. Annual growth is projected at 0.2%.
The latest data from Destatis on Tuesday showed that Germany’s Harmonized Index of Consumer Prices (HICP) came in at 6.5%, in line with market expectations. Earlier this week, the Eurozone Sentix Investor Confidence Index fell to -18.9 in August from -22.5 in July, compared with a consensus estimate of -23.4.
Patrick Hussy, managing director of Sentix, said the euro zone economy is still in recession. Therefore, we cannot be happier with this progress. However, interest rate peak speculation at the European Central Bank (ECB) was sparked by global ratings agency Fitch Ratings, which affected the euro against its rivals.
On the other hand, the 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. He added that the central bank will become more data-dependent and policymakers will react as the economy and data develop.
Notably, the Bank of England (BOE) raised interest rates by 25 basis points from 5% to 5.25% at its August policy meeting on 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 Bank of England’s aggressive tightening policy has heightened concerns about the negative impact on the UK economy and weighed on the pound.
Market participants will be closely watching the release of UK second-quarter gross domestic product (GDP) on Friday. The data could have a big impact on the dollar and provide a clear direction for EUR/GBP crosses.
