EUR/GBP holds ground near 0.8650 ahead of Eurozone Retail Sales data

• EUR/GBP receives support from German improved Industrial Production data released on Monday.
• German industrial production rose by 1.2% MoM in May, outperforming expectations for a flat reading.
• The Pound Sterling struggles amid mounting concerns over the United Kingdom’s fiscal outlook.

EUR/GBP continues to gain ground for the second successive session, trading around 0.8630 during the European hours on Monday. The currency cross receives support following Germany’s improved Industrial Production data release. Traders await Eurozone Retail Sales due later in the day.

Germany’s industrial output rose by 1.2% month-over-month in May, surpassing market expectations of no change and rebounding from a revised 1.6% decline in April. The annual production increased by 1.0%, reversing a 2.1% contraction in April, indicating a modest recovery in the country’s manufacturing sector.

The European Union (EU) Commission stated that it is nearing a framework for a trade agreement with the United States (US) to avoid the reintroduction of aggressive tariffs by the July 9 deadline. Also, Bloomberg reported that “Some European Union carmakers and capitals are pushing for an agreement with Trump that would allow for tariff relief in return for increasing investment in the US.

The UK Halifax House Prices climbed 2.5% year-over-year in June, the least in eleven months, against the 2.6% rise in May. The monthly house prices stalled, after an upwardly revised 0.3% decline.

The EUR/GBP cross gained ground as the Pound Sterling (GBP) faced challenges amid growing concerns over the United Kingdom’s (UK) fiscal outlook. Chancellor Rachel Reeves hinted at possible tax hikes in the autumn budget to address a public finance gap. This follows Labor's retreat on welfare reforms to avoid internal rebellion, with Reeves admitting there were costs to those concessions.

Analysts at Deutsche Bank expect another 25 basis points interest-rate cut to 4% by the Bank of England (BoE) in August. The analysts also expects the central bank to deliver two more interest rate cuts in November and December.