EUR/GBP holds positive ground above 0.8600 as traders await Eurozone HICP release

• EUR/GBP trades firmer to near 0.8620 in Thursday's early European session. 
• A slew of weaker UK data is likely to cement the case for the BoE to cut interest rates in August in a bid to boost the economy.
• The Eurozone GDP grew 0.1% QoQ in Q2, stronger than expected. 

The EUR/GBP cross trades on a stronger note around 0.8620 during the early European session on Thursday. The Pound Sterling (GBP) edges lower against the Euro (EUR) as traders remain confident that the Bank of England (BoE) will cut interest rates next month after a slew of weaker UK economic data. 

Last month, the BoE's Monetary Policy Committee (MPC) voted six to three to keep rates unchanged at 4.25%, following a quarter-point reduction in May. Analysts expect the UK central bank to deliver a rate cut in its August meeting due to cooling labor market conditions and elevated inflationary pressures in the United Kingdom (UK). This, in turn, might continue to weigh on the GBP and act as a tailwind for the cross in the near term.

Additionally, the BoE is expected to slow quantitative tightening, at which it shrinks its 558 billion-pound ($754 billion) holdings of government bonds, and economists hope next week will shed some light on its longer-term goals for the stockpile, per Reuters. 

The Eurozone Gross Domestic Product (GDP) came in stronger than expected in the second quarter (Q2), Eurostat reported on Wednesday. The Eurozone economy grew 0.1% QoQ in Q2 versus 0.6% prior, above the consensus of 0%. On an annual basis, the Eurozone GDP expanded 1.4% in Q2, compared to 1.5% in Q1, better than the forecasts of 1.2%. 

The upbeat GDP data indicated that businesses are adapting to trade uncertainty, potentially reducing the need for more European Central Bank (ECB) interest rate cuts to stimulate the bloc, which provides some support to the shared currency. 

Traders will take more cues from the preliminary reading of Harmonized Index of Consumer Prices (HICP) data for July, which are due later on Friday. HICP figures are expected to have grown moderately. However, any surprise downside of the reading could drag the Euro lower against the GBP.