EUR/GBP falls toward 0.8650 following German Industrial Production release

• EUR/GBP depreciates as German Industrial Production fell by 4.3% MoM and 3.9% YoY in August.
• ECB's Nagel stated that the current monetary policy stance remains appropriate, noting inflation is nearing the medium-term target of 2%.
• The Pound Sterling may struggle amid growing expectations that the BoE will implement one interest rate cut by year-end.

EUR/GBP trades around 0.8670 during the early European hours on Wednesday, remaining subdued following the release of the German Industrial Production data, which fell by 4.3% month-over-month (MoM) in August. The reading came after a 1.3% increase in July and exceeded market expectations of a 1.0% decline. Meanwhile, the annual industrial production declined by 3.9%, against a 1.5% increase prior.

European Central Bank (ECB) policymaker and Bundesbank President Joachim Nagel said in an interview with a Greek newspaper on Wednesday that "the ECB's current monetary policy is appropriate." "Eurozone inflation is close to the medium-term target of 2%, seen remaining there in the coming years," Nagel added.

The EUR/GBP cross also faces challenges as the Euro (EUR) struggles amid rising political issues in France, the second largest economy in the Eurozone. The resignation of France's Prime Minister, Sebastien Lecornu, puts the country's 2026 fiscal budget at risk, as political turmoil continues to hinder efforts to stabilize public finances.

The downside of the EUR/GBP cross could be restrained as the Pound Sterling (GBP) faces challenges amid rising expectations of the Bank of England's (BoE) one interest rate cut by the end of the year. Dovish expectations for the Bank of England have risen slightly amid increasing concerns over the UK labor market. The latest BoE survey indicated that businesses expect to maintain steady employment levels over the next 12 months.