EUR/GBP looks to consolidate around 0.8520 ahead of PMIs from Eurozone and UK

• EUR/GBP trades sideways ahead of the releases of PMI data from both economies.
• Pound Sterling experiences strength due to the possibility of more rate hikes by the BoE.
• UK wage growth caps the gains of the EUR/GBP pair.

EUR/GBP struggle to hold ground from the previous day's losses, trading around 0.8520 during the Asian session on Wednesday. The EUR/GBP downward trajectory is driven by the possibility of further interest rate hikes by the Bank of England (BoE).

Market participants also look to the UK economic docket, featuring preliminary S&P Global/CIPS Composite PMIs for August, scheduled to be released on Wednesday. These events are expected to provide valuable perspectives on the trajectories of both economies. As a result, they could have a significant impact on trading decisions concerning the EUR/GBP pair.

The United Kingdom’s (UK) wage growth served as a supporting factor for the Pound Sterling, potentially capping the gains of the EUR/GBP pair. This raises concerns about long-term inflation, supporting the chance of a 25 basis points (bps) rate hike in the September meeting by the BoE. Additionally, the robust UK GDP and moderate UK CPI figures support the likelihood of further policy tightening.

The Euro traders turn cautious ahead of the upcoming data release of preliminary HCOB PMIs from the Eurozone and Germany later in the day. However, an upbeat mood and a soft US Dollar (USD) coupled with declining US Treasury bond yields underpin the Euro. China’s economic woes are exerting pressure on the Euro but any signs of further indication on fiscal stimulus could be supportive.