EUR/GBP weakens as Pound holds firm ahead of UK, Eurozone GDP data

EUR/GBP slips below 0.8650 after failing to hold Tuesday’s rebound.
The British Pound draws support from steady UK unemployment at 4.7% and wage growth near 5%.
Traders await UK and Eurozone Q2 GDP data on Thursday.

Vishal Chaturvedi FXStreet

The Euro (EUR) extends its decline against the British Pound (GBP) on Wednesday, with EUR/GBP coming under renewed selling pressure after failing to sustain Tuesday’s overnight bounce. At the time of writing, the pair trades near 0.8625 in the early American session, down around 0.25% on the day.

In the broader currency market, moves are also being influenced by a softer US Dollar after the latest US Consumer Price Index (CPI) report reinforced expectations of an imminent Federal Reserve (Fed) rate cut in September. Markets are now pricing in a near-certainty of a 25 basis point cut with one additional cut by the end of this year. However, the Pound retains the upper hand against the Euro, supported by resilient wage growth in the UK and a cautious Bank of England (BoE) policy outlook.

Earlier this month, the BoE delivered a narrow 25 basis point cut to 4.00%, the lowest level since March 2023, but policymakers stressed they remain data-dependent. UK labour market figures this week showed unemployment steady at 4.7%, while regular pay growth held close to 5% annually — a sign that wage-driven inflation pressures remain in play. Markets have since scaled back expectations for another cut before November, lending further support to the Pound.

The Euro, meanwhile, remains under pressure from soft economic sentiment, with the ZEW Economic Sentiment Index for the Eurozone tumbling to 25.1 in August from 36.1, and Germany’s reading sliding to 34.7 from 52.7. Germany’s latest inflation data offered no fresh support, with the Harmonized Index of Consumer Prices (HICP) rising 0.4% in July, in line with forecasts and the previous month’s print, while the annual rate held steady at 1.8%.

Looking ahead, traders will focus on fresh growth figures from both the UK and the Eurozone on Thursday, with second-quarter Gross Domestic Product (GDP) data scheduled for release. The Eurozone’s preliminary Employment Change reading for Q2 will also be closely watched for indications of labour market strength. In addition, uncertainty surrounding the upcoming US-Russia peace talks could keep investors cautious and influence broader market sentiment.

Author

Vishal Chaturvedi

FXStreet

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

AUD/USD shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.

USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.

Gold: Fed’s rate decision to drive the next move

Gold reflects a subdued performance at the start of the Federal Reserve’s (Fed) monetary policy week at around $4,330. Fed’s interest rate expectations heavily influenced last week after the release of the hot United States (US) Producer Price Index (PPI) and Consumer Price Index (CPI) reports for August.

Pi Network extends gains as ecosystem development supports recovery

Pi Network (PI) extends its recovery on Monday, trading above $0.097 after two consecutive weeks of gains. Continued ecosystem development and improved developer tools are boosting utility. Meanwhile, the technical indicators point to a tentative recovery, but overhead Exponential Moving Averages remain a challenge and cap PI gains.

Canada CPI expected to show steady inflation in August

Canada’s August Consumer Price Index figures will be the focus of attention when published on Monday. Indeed, Statistics Canada data will provide markets with an update on price pressures following the Bank of Canada’s September 2 meeting, when officials kept the interest rate steady at 2.25%, broadly in line with analyst consensus.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.