EUR/GBP rises toward 0.8700 ahead of Eurozone HICP data

• EUR/GBP appreciates as the Eurozone inflation is expected to remain steady at ECB 2% target rate in August.
• ECB board member Isabel Schnabel sees no justification for another rate cut.
• The Pound Sterling may gain ground amid decreasing odds of further BoE rate cuts.

EUR/GBP has recovered its recent losses from the previous session and is trading around 0.8680 during the Asian hours on Tuesday. The currency cross gains ground as the Euro (EUR) appreciates ahead of the release of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for August.

The Euro receives support as the Eurozone inflation rate is anticipated to have remained steady at the European Central Bank (ECB) 2% target rate. The persistent inflation provides further reasons for the central bank to keep interest rates steady at its September meeting.

European Central Bank (ECB) board member Isabel Schnabel said on Tuesday that the interest rates are already mildly accommodative. Schnabel noted that inflation risks are tilted to the upside and highly unlikely to de-anchor to the downside. She added that she does not see a reason for a further rate cut.

The upside of the EUR/GBP cross could be restrained as the Pound Sterling (GBP) could draw further support from the dampening likelihood of further Bank of England (BoE) rate cuts, driven by persistent inflationary pressures in the United Kingdom (UK). Catherine Mann, a member of the BoE Monetary Policy Committee (MPC), stated last week that the bank rate should be held persistently to lean against inflation risks.

No significant market-moving economic data is scheduled for release from the UK on Tuesday. Traders will likely stay centered on the BoE's Monetary Policy Report Hearings on Wednesday, expected to play a pivotal role in shaping fresh momentum.