- EUR/GBP is facing hurdles around 0.8440 as investors await Wednesday’s Germany HICP.
- The German inflation data is likely to remain unchanged at 8.5% annually.
- A vulnerable UK GDP data may weaken the pound bulls ahead.
The EUR/GBP pair struggles to cross the immediate hurdle of 0.8440 in the early Tokyo session. The asset has been broadly auctioning in a range of 0.8410-0.8452 for the past three trading sessions as investors have shifted their focus towards the Germany Harmonized Index of Consumer Prices (HICP) data, which will release on Wednesday. The cross continued its four-day winning streak on Tuesday and will likely extend gains.
A preliminary estimate for the Germany HICP is 8.5%, similar to its prior close on an annual basis. Also, the monthly inflation data is seen unchanged at 0.8%. It is worth noting that Germany is a core member of the European Union (EU) and its inflation data holds significant importance for the eurozone.
No doubt, the Germany HICP is displaying some peak signals. However, this doesn't warrant that the European Central Bank (ECB) won’t go for a rate hike announcement. The ECB has been slowest in elevating interest rates among its Western peers due to regional imbalance after Russia invades Ukraine. Therefore, the rate hike odds are sky-rocketing as inflation is beyond the desired rate.
On the pound front, the Gross Domestic Product (GDP) release holds significant importance. The economic data is expected to plummet to 2.8% vs. 8.7% reported earlier on an annual basis. Apart from that, the UK Office for National Statistics will also report the Industrial Production and Manufacturing Production data; their estimates don’t seem lucrative.
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