EUR/GBP remains above 0.8800 ahead of Eurozone data, BoE interest rate decision

• EUR/GBP holds gains ahead of key economic data from Germany and the Eurozone.
• The Euro gains ground due to the cautious ECB policy outlook.
• The Pound Sterling maintains its position as traders expect the BoE to leave its rates unchanged.

EUR/GBP rebounds and targets highs since May 2023, trading around 0.8810 during the Asian hours on Thursday. The currency cross gains ground ahead of German Industrial Production and Eurozone Retail Sales data for September due later in the day. Traders also await the Bank of England's (BoE) interest rate decision for November.

Germany's seasonally-adjusted Industrial Production is expected to increase 3% month-over-month in September, recovering the previous decline of 4.3%. The non-seasonally adjusted, working-day adjusted data showed a 3.9% year-over-year decline in August.

Eurozone Retail Sales are expected to rise 0.2% MoM in September, following August's 0.1% increase. Meanwhile, the annual sales are anticipated to remain consistent at 1% growth.

The Euro (EU) receives support from market expectations that the European Central Bank (ECB) would likely adopt a cautious stance in its upcoming policy meeting. The ECB left its deposit rate unchanged at 2.0% for a third meeting last week. The central bank noted that the inflation outlook remains broadly stable, the economy continues to grow, and uncertainty persists.

The upside of the EUR/GBP pair could be limited as the Pound Sterling (GBP) receives support as the BoE is widely expected to keep its policy rate unchanged at 4% in November. However, softer inflation and wage data have strengthened the case for rate cuts in the coming months.

Chancellor Rachel Reeves is expected to introduce stricter fiscal measures in her November 26 budget to tackle the UK's substantial borrowing requirements. Reeves hinted, in a pre-budget address, at raising taxes and underscored the importance of managing debt and borrowing expenses.