Ella 
EUR/GBP struggled to rise and remained on the defensive above the 0.8600 mark in Asia on Monday. Market participants await the release of second-quarter GDP data for the euro zone on Wednesday, which is expected to grow by 0.6% on an annualized basis and 0.5% on a monthly basis.
The European Central Bank’s monthly economic bulletin released last week showed that the inflation rate in the euro area is expected to remain at a high level for a long time, and the outlook for economic growth and inflation remains uncertain. The 2% inflation target won’t be hit until at least 2025, and more than 90% of economists don’t expect a rate cut until the second quarter of 2024, according to a Reuters poll.
In the United Kingdom, the report released by the National Bureau of Statistics last Friday showed that the GDP in July unexpectedly increased by 0.5% month-on-month, the market consensus was 0.2%, and the previous value fell by 0.1%. In addition, industrial output rose by 1.8% in June, higher than the market consensus of 0.1% and the previous value fell by 0.6%. Finally, manufacturing output rose 2.4% month-on-month, better than the expected 0.2% and the previous value of -0.1%.
Optimistic UK economic data increases the probability of further interest rate hikes by the Bank of England. With the UK economy weak and interest rates at 5.25%, a 15-year high, market participants were wary of the Bank of England’s actions. Aggressive monetary policy could have a negative impact on the UK economy. However, UK inflation data and wage data will provide clues to the Bank of England’s next interest rate decision.
Looking ahead, Eurozone second-quarter GDP and July’s harmonized inflation rate are due this week. In the UK, the UK will announce July jobless claims, consumer price index and retail sales data. Data will be the key to determining the direction of GBP/USD.
