EUR/GBP remains close to the 0.8545 highs with downside attempts limited

• The Euro consolidates near multi-week highs.
• A string of weak UK data has undermined confidence in the Pound.
• UK CPI figures and the BoE decision might increase Pound's weakness later this week.

Euro buyers appeared on Monday to keep downside attempts limited at the 0.8500 area and the EUR/GBP's immediate bullish trend intact. The pair is extending gains on Tuesday and approaches six-week highs, at 0.8545.

The German ZEW Index, released earlier on Tuesday, revealed a larger-than-expected improvement in the economic sentiment in June, which provided moderate support to the Euro.

Institutional investors' confidence in the German economy jumped to 47.5 in June, almost twice May's 25.2 reading and well above the 35 market forecasts. The sentiment about the Eurozone economic outlook has improved to 35.3 from 11.6, also beating expectations of a 23.5 reading.

The Pound struggles ahead of the BoE decision

The Pound, on the other hand, remains on the defensive ahead of Thursday's monetary policy decision by the Bank of England. The BoE is widely expected to keep rates on hold after the 25 bps cut approved in the last meeting, but might hint at further easing on the back of the weakening economic outlook.

UK data released last week showed that the economy contracted in April on the back of the US tariff turmoil, with industrial production declining beyond expectations and unemployment figures rising.

UK CPI data is out on Wednesday and will frame the BoE's decision. Any hint towards further monetary easing is likely to highlight a monetary divergence with the ECB's hawkish rhetoric and might give an additional boost to the Euro.