EUR/GBP finds buying interest near 0.8820 ahead of Eurozone GDP and German Inflation data

• EUR/GBP has shown some buying interest near 0.8820 as investors turn cautious ahead of Eurozone data.
• Eurozone GDP and German HICP carry significant importance as they will be the latest before ECB policy next week.
• An absence of UK’s inflation softening signals advocates more rate hikes from the ECB.

The EUR/GBP pair has sensed some attraction near 0.8820 after a perpendicular sell-off on Thursday. The cross is showing signs of recovery as investors are shifting their focus toward the Eurozone Gross Domestic Product (GDP) and German Harmonized Index of Consumer Prices (HICP) data.

The release of the preliminary Eurozone GDP and German HICP carries significant importance as they will be the latest economic data before the interest rate decision by the European Central Bank (ECB)which will be announced next week.

As per the consensus, preliminary Eurozone GDP has grown by 0.2% in the first quarter vs. a stagnant performance. On an annual basis, preliminary GDP is seen expanding by 1.4% at a slower pace than the 1.8% recorded earlier. ECB policymakers are confident that Eurozone will dodge the recession amid solid consumer spending due to labor shortage.

Meanwhile, preliminary monthly German inflation is seen accelerated by 0.8% vs. the 1.1% pace recorded in the prior month. This is going to provide some relief to ECB policymakers. However, more focus will be on core inflation figures as ECB policymakers believe that the core Consumer Price Index (CPI) has remained extremely stubborn.

Analysts at Danske Bank point see a 50bp rate hike more likely by ECB President Christine Lagardewith no specific forward guidance but repeating a data-dependent approach to future policy decisions.

On the Pound Sterling front, the absence of inflation softening signals is strengthening the case for more rate hikes from the Bank of England (BoE). The street is anticipating a consecutive 25 bp rate hike from BoE Governor Andrew Bailey to 4.50% for its May monetary policy meeting.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.