EUR/GBP maintains position near 0.8650 ahead of German CPI inflation

• EUR/GBP moves little following the release of German Retail Sales data on Friday.
• German Retail Sales climbed 1.9% YoY in July, against a 4.9% rise prior and an expected 2.6% increase.
• The Bank of England is likely to remain hawkish amid persistent inflationary pressures in the UK.

EUR/GBP holds ground after registering gains in the previous session, trading around 0.8640 during the early European hours on Friday. The currency cross moves little following the release of German Retail Sales data. German preliminary inflation readings are next in focus. Later in the North American session, the US Personal Consumption Expenditures (PCE) Price Index data for July will be eyed.

The Federal Statistics Office of Germany, Destatis, published the Retail Sales report on Friday, indicating a rise of 1.9% year-over-year in July, following a 4.9% jump reported in June. The market forecast was for a 2.6% increase. Retail Sales dropped 1.5% month-over-month in July versus June’s 1% growth and -0.4% expected.

The European Central Bank’s (ECB) July Meeting Minutes indicated that policymakers view risks tilted to the downside over the next two years, citing weaker growth prospects and the impact of US tariffs. However, some members cautioned that longer-term risks could lean to the upside, particularly amid uncertainties surrounding energy and currency fluctuations.

The upside of the EUR/GBP cross could be restrained as the Pound Sterling (GBP) may gain ground as the Bank of England (BoE) is unlikely to cut interest rates in 2025. Inflationary pressures in the United Kingdom (UK) have accelerated each month since May, with the headline Consumer Price Index (CPI) climbing 3.8% year-on-year in July.