EUR/GBP tumbles to near 0.8700 as traders await BoE rate decision

•  EUR/GBP attracts some sellers to around 0.8715 in Monday's early European session, down 0.10% on the day.
• The markets expect the BoE to cut interest rates by 25 bps to 4.0% at the August meeting. 
  The preliminary Eurozone HICP data for July has diminished hopes of more interest rate cuts by the ECB.

The EUR/GBP cross loses momentum to near 0.8715, snapping the two-day losing streak during the early European trading hours on Monday. Investors will closely monitor the Bank of England (BoE) interest rate decision on Thursday. 

Traders remain confident that the BoE will cut interest rates at its August meeting on Thursday after a slew of weaker UK economic data and signal a pause as price pressures remain well above the 2% target. The markets have priced in two further reductions, taking interest rates to 3.5% by the summer of next year. The more dovish remarks from the BoE officials could favor a depreciation in the Pound Sterling (GBP) against the shared currency in the near term.

On the Euro's front, US President Donald Trump announced a 15% US tariff ceiling on most EU exports, including automobiles, semiconductors, consumer goods, and pharmaceuticals, averting previously threatened rates as high as 30% or more. This step is largely seen as a de-escalation measure after months of discussion and stress. Optimism surrounding US-EU trade deals could support the EUR, while any signs of renewed trade tensions could underpin the GBP. 

A steady growth in the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for July has diminished hopes of more interest rate cuts by the European Central Bank (ECB). This, in turn, might help limit the EUR's losses. The data showed on Friday that both headline and core HICP rose steadily by 2.0% and 2.2% on year, respectively, slightly faster than their estimates.