EUR/GBP consolidates around 0.8650 ahead of UK Retail Sales

• EUR/GBP is oscillating around 0.8650 as investors await UK Retail Sales data for further guidance.
• The real income of UK households could grow as PPI has eased significantly.
• The ECB is expected to raise interest rates on July 27 and in September too.

The EUR/GBP pair is demonstrating back-and-forth moves around 0.8650 in the Asian session. The cross is awaiting the release of the United Kingdom Retail Sales data for June for a decisive move, which will be published at 06.00 GMT.

After loosening labor market conditions and softening inflationary pressures, UK’s Retail Sales data will provide more guidance about the interest rate decision to be announced by the Bank of England (BoE) in August.

As per the estimates, monthly Retail Sales data expanded by 0.2% in June vs. 0.3% in May. Annual Retail Sales data is expected to contract by 1.5% against the former release of -2.1%. Monthly Retail Sales excluding fuel prices is seen unchanged at 0.1%. And, annualized consumer spending data excluding fuel is seen contracting marginally to 1.6% from the former release of -1.7%.

Contracting consumer spending indicates the burden of high inflation and higher interest rates by the Bank of England (BoE). UK households have already postponed the purchase of big-ticket items to address their necessities. Meanwhile, the real income of households could grow as Producer Price Index (PPI) has eased significantly.

Meanwhile, the Euro is facing severe pressure despite investors hoping that the European Central Bank (ECB) will raise interest rates in September too. According to a Reuters poll from economists, the ECB will raise interest rates by 25 basis points on July 27, and a slight majority of whom were now also expecting another hike in September.

Investors should note that ECB President Christine Lagarde remained doors open for more interest rate hikes as core inflation in Eurozone is critically persistent.