EUR/GBP oscillates around 0.8760 ahead of BOE policy

The EUR/GBP pair is displaying topsy-turvy moves in a narrow range of 0.8758-0.8767 range as investors are awaiting the announcement of the interest rate decision by the Bank of England (BOE). Earlier, the asset rebounded sharply after dropping to near 0.8724. The confident buying action seems responsive, and the asset will scale higher after overstepping the critical hurdle of 0.8787.

The potential trigger for a decisive break in the cross will be the BOE’s monetary policy. Inflationary pressures surprisingly decline for August after remaining above the double-digit figure despite soaring energy bulls for the UK households. However, the August inflation rate decline doesn’t encourage BOE policymakers to soften their approach. The BOE has to swallow the bitter gulp and announce a rate hike by 50 basis points (bps) despite no support from growth prospects and the labor market.

However, the BOE could not settle the higher price rise index into economic behavior as earnings data is not supportive of offsetting the forced inflated payouts by the households.

Meanwhile, the Eurozone economy is working hard to recover from a deepened energy crisis. The German government has decided to bail out the natural gas importer Uniper to ensure sufficient gas supplies in the winter.

While Russian leader Vladimir Putin has stated that the gas supply will start to Europe if the trading bloc lifts sanctions on Nord Stream pipeline 2, Germany needs to make enough gas inventories to cater to the elevated demand during the winter season. However, the western sanctions on Russia are not expected to get lifted.