EUR/GBP keeps the red above mid-0.8500s after Eurozone inflation data, ahead of BoE's Bailey

• EUR/GBP snaps a two-day winning streak, though it lacks follow-through selling.
• The Eurozone consumer inflation meets expectations and fails to influence the cross.
• Traders now look to BoE Governor Bailey's speech for some meaningful impetus.

The EUR/GBP cross retreats from the vicinity of the 0.8600 mark, or its highest level since April 23 touched earlier this Tuesday and sticks to modest intraday gains through the first half of the European session. Spot prices, however, manage to hold above mid-0.8500s and move little following the release of the latest consumer inflation figures from the Eurozone.

The official data released by Eurostat showed the Eurozone Harmonized Index of Consumer Prices (HICP) increased at an annual pace of 2% in June, in line with the market expectations following a 1.9% growth reported in May. Moreover, the core HICP rose 2.3% YoY during the reported month, at the same pace as seen in May, meeting the 2.3% estimate.

The market reaction, however, turns out to be muted as the data fails to influence market expectations about more interest rate cuts by the European Central Bank (ECB) in H2 2025. This, in turn, is seen as a key factor behind the shared currency's relative underperformance against its British counterpart and exerting some downward pressure on the EUR/GBP cross.

However, hopes that the European Union (EU) will strike a trade deal with the US ahead of US President Donald Trump's July 9 deadline help limit losses for the EUR. Traders also seem reluctant to place directional bets around the EUR/GBP cross and opt to wait for Bank of England (BoE) Governor Andrew Bailey's comments at the ECB Forum on Central Banking, in Sintra.

Even from a technical perspective, the lack of follow-through selling below mid-0.8500s warrants caution for aggressive bearish traders. Hence, it will be prudent to wait for strong follow-through selling before positioning for any further depreciating move for the EUR/GBP cross.