EUR/GBP maintains position near 0.8400 ahead of German HICP inflation, UK GDP data

• EUR/GBP could face further depreciation as the Euro weakens amid an escalating US-EU trade war.
• President Trump threatened a 200% tariff on all European wines and champagne, raising global market concerns.
• UK economy is projected to have grown modestly by 0.1% in January, down from the 0.4% expansion seen in December.

EUR/GBP holds ground after registering losses in the previous two consecutive sessions, trading around 0.8380 during the Asian hours on Friday. The currency cross faced challenges as the Euro (EUR) depreciated against its peers amid an escalating trade war between the United States and the European Union (EU). US President Donald Trump threatened a 200% tariff on all European wines and champagne during Thursday's early US session, sparking concerns in global markets.

Traders are expected to closely monitor Germany's February Harmonized Index of Consumer Prices (HICP), along with the UK's January Gross Domestic Product (GDP) and factory data, set for release later in the day.

European Central Bank (ECB) policymaker and Bundesbank President Joachim Nagel warned that US tariffs on imported goods could push Germany, Europe's largest economy, into another recession, worsening its economic struggles. "We are in a world with tariffs, so we could expect maybe a recession this year if the tariffs take effect," Nagel said on Thursday.

Traders will closely watch the UK GDP figures as the Bank of England (BoE) has expressed concerns over the economic outlook. In its February policy meeting, the BoE revised its GDP growth forecast for the year to 0.75%, down from the 1.5% projected in November.

The UK economy is projected to have grown modestly by 0.1% in January, slowing from the 0.4% expansion recorded in December. Meanwhile, monthly factory data is expected to show a decline for the first month of 2025.