EUR/GBP holds positive ground above the 0.8540 area following the German PPI data

The EUR/GBP holds positive ground near 0.8545 heading into the early European session on Friday. The cross trades in positive territory for the second consecutive day. Market players await the inflation data from both UK and Eurozone for fresh impetus.

The latest data on Monday by the Statistisches Bundesamt Deutschland reported that the annual German Producer Price Index (PPI) for July fell to -6% versus a 0.1% increase and worse than the market expectation of -5.1%. The monthly PPI figure declined to -1.1% against the market consensus of -0.2% and -0.3% prior. Furthermore, the easing Eurozone inflationary pressure, according to data released by Eurostat on Friday, alleviating pressure on the European Central Bank to continue raising interest rates. This, in turn, leads to the weakness in the Euro against its rivals.

On the Pound Sterling front, the Office for National Statistics (ONS) reported on Friday that monthly UK Retail Sales for July dipped -1.2%, below a -0.5% drop expected. Meanwhile, the annual figure fell -3.2%, against the estimation of -2.1%. The anticipation that the Bank of England (BoW) will maintain tightening remains high. However, the fear of an aggressive rate hike by the BoE might exert pressure on the Pound Sterling as investors worry that it might impact negatively the UK economy.

Looking ahead, the Eurozone Current Account and S&P Purchasing Managers' Index (PMI) and German Gross Domestic Product (GDP) Q2 will be released later this week. On the UK docket, the preliminary S&P PMI for August will be due on Wednesday. The data will be critical for determining a clear movement for the EUR/GBP cross.