EUR/GBP moves sideways around 0.8550 as focus turns to ECB President Lagarde speech

EUR/GBP trades higher around 0.8550 during the early trading hours in the European session on Thursday. The downbeat economic data from the United Kingdom (UK) released on Wednesday reinforced the pair. The preliminary S&P Global/CIPS Composite PMI declined to 47.9 in August from the previous 50.8, weaker than the expectation of 50.3. The index fell below 50 for the first time since January, suggesting a contraction in the UK's private-sector economic activity.

On the other hand, equally soft PMI data from the Eurozone and Germany could be capping the gains of the EUR/GBP pair. This comes amid a cautious market sentiment as investors appear to be waiting for key speeches concerning the inflation outlook in the Eurozone.

Eurozone’s preliminary HCOB Composite PMI for August declined to 47.0 against the expectation of 48.5 from the previous 48.6. Germany’s Composite PMI fell to 44.7, lower than the market consensus of 48.3 and July's reading of 48.5.

Investors had already priced in the lower probability of an interest rate hike in the September meeting by the European Central Bank (ECB) given moderate GDP growth and softer inflation figures released the previous week. However, the EUR/GBP pair strengthened due to the disappointing UK economic data, which reduced the likelihood of further monetary policy tightening by the Bank of England (BoE).

ECB President Christine Lagarde’s speech will be the focal point for Investors on Friday during the Jackson Hole annual symposium, which may provide insights into the financial and economic outlook. Market participants are also likely monitor the UK GfK Consumer Confidence indicator for August.