- EUR/GBP loses traction and currently trades near 0.8625 on Monday.
- The UK Gross Domestic Product (GDP) grew unexpectedly by 0.5% MoM in June, versus the market consensus of 0.2%.
- The Eurozone Gross Domestic Product (GDP) Q2, UK inflation data will be in the spotlight.
The EUR/GBP cross struggles to gain and remains on the defensive above the 0.8600 mark in the Asian session on Monday. Market players await the Eurozone Gross Domestic Product (GDP) Q2 due on Wednesday. The growth numbers are expected to remain at 0.6% and 0.5% on a yearly and monthly basis, respectively.
The European Central Bank's (ECB) monthly Economic Bulletin revealed last week that the Eurozone’s inflation is still predicted to be too high for too long, and the prospects for economic growth and inflation are still uncertain. According to the Reuters poll, the target inflation rate of 2.0% will not be reached until at least 2025, and more than 90% of economists surveyed anticipate no rate cuts before the second quarter of 2024.
On the UK front, the UK National Statistics reported on Friday that the UK Gross Domestic Product (GDP) grew unexpectedly by 0.5% MoM in June, versus market consensus of 0.2% and a 0.1% decline in the previous month. Additionally, UK Industrial Production rose 1.8% on a monthly basis in June, above the expectation of a 0.1% increase and a 0.6% drop prior. Lastly, Manufacturing Output came in at 2.4% m/m, better than expected of 0.2% and 0.1% drop in the previous reading.
The upbeat economic data in the United Kingdom increases the likelihood that the Bank of England (BoE) will hike the additional interest rate. As the UK economy is fragile and the interest rate is at a 15-year high of 5.25%, market participants are cautious about the BoE's move. The aggressive monetary policy could negatively affect the British economy. However, the UK inflation data and wage data will provide clues for the BoE's next meeting decision.
Moving on, the Eurozone Gross Domestic Product (GDP) Q2 and Harmonized Index of Consumer Prices for July will be released later this week. On the UK docket, the UK Claimant Count Change for July, Consumer Price Index (CPI), and Retail Sales MoM will be due. The data will be critical for determining a clear movement for the EUR/GBP cross.
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