The EUR/GBP higher amid wavering Sterling

to kick off the trading week, the EUR/GBP pair is decisively climbing over the 0.8600 handle and extending upwards as the Bank of England (BoE) looms over the horizon.

Sterling bulls hope to survive this week’s UK inflation data before BoE rate call. The Bank of England is broadly expected to lift the benchmark interest rate 25 basis points to 5.5% on Thursday, but market action will be positioning early as inflation figures for the British economy will land on Wednesday beforehand.

The UK’s Consumer Price Index (CPI) will hit markets at 06:00 on Wednesday, with the headline inflation figure for August forecast to show a step up to 0.7%, compared to the previous decline of -0.4%.

Thursday sees the BoE lifting interest rates once more as the UK’s central bank struggles to gain firm control of inflation, with prices continuing to tick higher despite already-high interest rates threatening to tip over the British economy.

The European Central Bank’s (ECB) rate hike last week hit the Euro hard after the ECB’s President Christine Lagarde noted that this is looking like the end of the ECB’s rate hike cycle. Investors will now be turning to the BoE’s upcoming showing to reposition the EUR/GBP exchange rate.

Further into the week, both the EUR and the GBP will see Purchasing Manager Index (PMI) figures. The EU’s pan-continent activity outlook is expected to tick slightly lower to 46.3 versus the previous 46.7. On the UK side, purchasing manager expectations are expected to hold steady at 48.6.