EUR/GBP posts modest gain above 0.8600 ahead of German inflation data

• EUR/GBP trades in positive territory around 0.8625 in Thursday's early European session. 
• EU hopes to agree to a US tariff deal 'in coming days.'
• The UK monthly GDP report will be published on Friday. 

The EUR/GBP cross trades with mild gains near 0.8625 during the early European session on Thursday. Optimism around the United States (US)-European Union (EU) deal underpins the Euro (EUR). The German June inflation data will be released later on Thursday. On Friday, the attention will shift to the UK Gross Domestic Product (GDP) report. 

The EU said that it hopes to agree to a US tariff deal "in the coming days" that would avoid import taxes Trump has threatened on its goods. Additionally, optimism that the White House will not target the bloc with additional tariffs and that it could secure some exceptions to the baseline rate of 10% might provide some support to the shared currency. 

Trump said on Tuesday that the EU will "probably" receive a letter setting its new US tariff rate on Thursday, as the bloc had shifted from being "very tough" to "very nice." 

The Bank of England (BoE) Governor Andrew Bailey said earlier this month that "the path of interest rates will continue to be gradually downwards," as the UK central bank juggles taming inflation and stoking elusive economic growth. Analysts expect the BoE to cut rates by 25 basis points (bps) at their next policy meeting in August, which would bring the interest rate to 4.0% from 4.25%.

The UK GDP report for May will be closely watched, which is expected to grow by 0.1% MoM in May from a contraction of 0.3% in the previous reading. In case of a stronger-than-expected outcome, this could reduce the chance of a BoE rate reduction, supporting the GBP.