EUR/GBP consolidates below 0.8600 ahead of German CPI, risk-on sentiment
- EUR/GBP remained unchanged virtually in the initial European trading hours.
- Upbeat economic data, rate hike expectations lift the demand for the cable.
- ECB signals delayed rate hike hurting the sentiment around the euro.
The EUR/GBP price remained subdued on the first trading day of the week ahead of the German inflation data. The cross is confined in a very narrow trade band comprising a 10-pip movement for the time being.
As of writing, EUR/GBP trades at 0.8595, up 0.06% for the day.
Investors' improved risk appetite post upbeat US economic data amid Fed’s dovish stance on the monetary policy prompts market participants to rush toward riskier assets.
GBP remained upbeat on sound economic data as the economy is gearing up for stage four of reopening on June 21st, despite the threat of the Indian variant of covid-19.
The Bank of England (BOE) policymaker Gertijan Vielghe, signaled that the central bank might start raising interest rates sooner than expected in 2022 if the economy continues to show signs of recovery.
Meanwhile, the European Central Bank (ECB) reiterated its commitment to preserving favourable financing conditions using the Pandemic Emergency Purchase Programme (PEPP) envelope until at least March 20222. This, in turn, hurt the shared currency’s sentiment.
The tussle over Brexit continues to influence the cross movement. In the latest development, the UK’s Office of National Statistics (ONS) reported Q1 trade between UK and EU dropped 23% in Q1, compared with 0.8% with the rest of the world.
As for now, traders turn their attention to the release of German harmonized Index of Consumer Inflation (HICP) to gauge market sentiment.
EUR/GBP Additional Levels