EUR/GBP loses ground below 0.8550 ahead of BoE's Bailey speech

• EUR/GBP tumbles to around 0.8525 in Thursday's early European session.
• The strong UK PMI data underpin the Pound Sterling and create a headwind for the cross. 
• BoE's Bailey sees more signs of a softening labor market. 

The EUR/GBP cross loses traction to near 0.8525 during the early European session on Thursday, pressured by a stronger Pound Sterling (GBP) broadly. Traders will closely monitor the Bank of England's (BoE) Governor Andrew Bailey speech later on Thursday.

UK business activity expanded modestly in June, which provides some support to the GBP. The S&P Global UK Composite PMI rose to 50.7 in June versus 50.3 prior, stronger than the 50.5 expected. Additionally, the services sector, which dominates the UK economy, registered its fastest growth in three months and outperformed its German and French counterparts in June.

BoE Governor Andrew Bailey said on Tuesday there were now signs that the UK labor market was softening, and he emphasized his view that interest rates are likely to continue falling. The UK central bank left interest rates unchanged at 4.25% at the June meeting, although three of the nine members of the Monetary Policy Committee (MPC) voted to cut interest rates. 

The BoE's Bailey speech will be the highlight later in the day. Any dovish comments from the policymakers could drag the Pound Sterling lower and cap the downside for the cross. 

On the Euro front, the European Central Bank (ECB) officials are expected to face downside economic risks considering the uncertainty surrounding the tariff policy imposed by the US. Traders will take more cues from the speeches by the ECB policymakers. ECB's Luis de Guindos and Isabel Schnabel are scheduled to speak later on Thursday.