Ella 
In early trading in the European market on Wednesday, EUR/GBP was still limited to the range of 0.8597-0.8607. Market participants await preliminary readings of Germany’s consumer price index for August. The cross is currently flat around 0.8604.
Weaker-than-expected economic data in the euro zone could persuade the European Central Bank to pause interest rate increases at its meeting on September 14. Germany’s GFK consumer confidence index released on Tuesday recorded -25.5, the previous value was -24.6, lower than market expectations of -24.3. In addition, the euro zone’s money supply fell for the first time since 2010 as private sector borrowing slowed and deposits fell.
European Central Bank policymakers are divided on whether to stop raising interest rates or tighten policy further. This week’s Eurozone inflation data and updated economic forecasts from the European Central Bank are likely to provide signals about future monetary policy and provide direction for the EUR/GBP cross.
In sterling, the British Retail Consortium’s year-on-year growth rate fell to 6.9% in August from 7.6% in July. Markets see a 75% chance of the Bank of England (BOE) raising interest rates by 25 basis points (bps) in September, according to the World Interest Rate Probability (WIRP) tool. This in turn could limit the downside for GBP and be bearish for EUR/GBP.
Traders will focus on Wednesday’s preliminary reading of Germany’s consumer price index for August. Annual and monthly growth rates are expected to be 6% and 0.3% respectively. In addition, Eurozone CPI, retail sales and ECB meeting minutes will also be released this week. Traders will be looking for clues and looking for EUR/GBP trading opportunities.
