Market Analysis

The EUR/GBP pair has declined for the second consecutive session, trading around 0.8440 during Tuesday's European trading hours. The Euro is facing challenges against the Pound Sterling (GBP) following recent inflation data from Germany.

Germany's Harmonized Index of Consumer Prices (HICP) remained at a 2.0% year-on-year increase in August, meeting expectations. The monthly index also saw a predicted decline of 0.2%. Similarly, the Consumer Price Index (CPI) held steady at 1.9% year-on-year in August, aligning with market forecasts.

Eurozone headline inflation remains close to 2%, and with mixed Gross Domestic Product (GDP) data, there are growing expectations of a potential rate cut by the European Central Bank (ECB) at Thursday's policy meeting.

The Pound Sterling (GBP) is receiving support from mixed employment data in the United Kingdom (UK). The ILO Unemployment Rate fell to 4.1% for the three months ending in July, down from 4.2% in June, according to the Office for National Statistics (ONS).

The UK Claimant Count Change showed a decrease of 23.7K in August, significantly lower than the market's forecast of 95.5K and the previous 102.3K. Average Earnings Including Bonus (3Mo/Yr) came in at 4.0% in July, slightly below the expected 4.1% and down from the prior 4.6%.

Bank of England (BoE) policymakers remain concerned about persistent inflation, especially in the services sector. A slowdown in wage growth could alleviate these concerns and boost market speculation about potential interest rate cuts by the BoE in September. Attention now shifts to the UK's GDP numbers due on Wednesday.

Paraphrasing text from "FX Street" all rights reserved by the original author.