EUR/GBP faces headwinds near 0.8650 following UK Retail Sales, Eurozone GDP eyed

• EUR/GBP faces a slight challenge as UK Retail Sales rose 0.6% MoM and 1.1% YoY in July.
• The Pound Sterling may encounter challenges as Bank of England officials deliver mixed remarks.
• Eurozone Gross Domestic Product is projected to hold steady at 1.4% YoY and 0.1% QoQ growth in Q2.

EUR/GBP continues its losing streak for the third successive session, trading around 0.8670 during the Asian hours on Friday. The currency cross faces some headwinds after the release of mixed Retail Sales data from the United Kingdom (UK). Focus shifts toward the Eurozone Gross Domestic Product (GDP) due later in the day.

The UK Office for National Statistics (ONS) reported on Friday that Retail Sales climbed 0.6% month-over-month in July, following a 0.3% growth in June (revised from 0.9%). The reading came above the expected 0.2% rise. Meanwhile, the annual consumer spending grew 1.1%, falling short of the expected 1.3% increase but coming in higher than the previous growth of 0.9%.

The EUR/GBP cross may further appreciate as the Pound Sterling (GBP) may face challenges amid mixed remarks from the Bank of England (BoE) officials. BoE Governor Andrew Bailey said, before the Treasury Select Committee, while the direction for interest rates remains downward, there is "considerably more doubt" over how quickly cuts can be delivered. Meanwhile, BoE Deputy Governor Clare Lombardelli and BoE monetary policymaker Megan Greene reiterated a hawkish guidance on the interest rate outlook, citing upside inflation risks.

The Euro (EUR) maintains its position ahead of the Eurozone Gross Domestic Product for the second quarter. The seasonally adjusted Eurozone GDP is expected to remain consistent at growth of 1.4% year-over-year and 0.1% quarter-over-quarter for the second quarter.

The Euro gains ground due to the cautious mood surrounding the European Central Bank's (ECB) policy outlook. ECB board member Isabel Schnabel said on Tuesday that the interest rates are already mildly accommodative, adding that she does not see a reason for a further rate cut. Meanwhile, ECB Governing Council member Gediminas Šimkus said that there is "no reason to adjust rates now."