EUR/GBP attracts some sellers below 0.8750 as BoE keeps cautious stance on future cuts

• EUR/GBP softens to around 0.8720 in Monday's early European session. 
• BoE's Greene warned of upside inflation risks.
• Persistent conflict between Russia and Ukraine could weigh on the EUR against the GBP. 

The EUR/GBP cross loses momentum to near 0.8720 during the early European session on Monday. The expectation that the Bank of England (BoE) is unlikely to cut the interest rates in the near term provides some support to the Pound Sterling (GBP) against the Euro (EUR). Germany's Retail Sales for August and UK Gross Domestic Product (GDP) data for the second quarter (Q2) will be highlights later on Tuesday. 

Traders expect the UK central bank to hold interest rates steady at 4.0% in the remainder of the year. The BoE has taken a "gradual and careful" approach to rate reductions as inflationary pressures in the UK economy are proving to be persistent. BoE Monetary Policy Committee (MPC) member Megan Greene last week warned of upside inflation risks and advised caution on loosening the monetary policy further. 

The UK GDP is estimated to grow by 0.3% QoQ in Q2, compared to 0.3% in the previous reading. On an annual basis, the UK GDP is projected to expand 1.2% during the same period. Any signs of weakness in the UK economy could weigh on the GBP and create a tailwind for the cross. 

CNN reported that Russia fired more than 600 drones and missiles at targets across Ukraine in the early hours of Sunday morning - one of the largest barrages of the war. Ukrainian President Volodymyr Zelensky said the deaths all occurred in the capital, Kyiv, where many of the projectiles were aimed, and the victims included a 12-year-old girl. The escalating tension between Russia and Ukraine implies higher energy costs and increases geopolitical uncertainty in the Eurozone, which generally undermines the EUR.