EUR/GBP trades above 0.8600, holds position near three-month highs

• EUR/GBP rose to a three-month high of 0.8623 marked on Thursday.
• The Pound Sterling may struggle due to the rising odds of a BoE rate cut in August.
• ECB policymaker Olli Rehn stated that the central bank could consider further rate cuts if inflation continues to slow.

EUR/GBP edges higher to three-month highs, trading around 0.8610 during the Asian hours on Thursday. The EUR/GBP cross receives support due to the rising expectations of the Bank of England (BoE) delivering a 25-basis point rate cut at its August meeting. Additionally, market expectations now include the possibility of two more quarter-point rate cuts by the BoE by December.

The Royal Institution of Chartered Surveyors (RICS) released the housing costs in the United Kingdom (UK). RICS Housing Price Balance posted a reading of -19% in July, as compared to the previous reading of -17%, the lowest since December last year.

On the Euro front, traders await the release of Germany's Harmonized Index of Consumer Prices (HICP) by the German statistics office Destatis on Friday. Market expectations are steady, with forecasts of a 2.6% year-on-year increase and a 0.5% month-on-month rise.

On Tuesday, Eurozone Retail Sales declined by 0.3% month-over-month in June, exceeding market expectations of a 0.1% decrease. On a yearly basis, retail sales also fell by 0.3%, compared to a 0.1% expected increase and a 0.5% increase previously.

The European Central Bank (ECB) policymaker Olli Rehn said on Wednesday that the central bank can continue cutting interest rates if there is confidence among policymakers that the inflation trend is slowing in the near future. The central bank left interest rates on hold at its July meeting. Rehn said "Inflation continues to slow down but the path to the two percent target remains bumpy this year," per Reuters.