EUR/GBP trades with a bearish bias near 0.8550 after German inflation data

• EUR/GBP trades in negative territory for the third consecutive day near 0.8560 in Friday’s early European session. 
• The German HICP inflation came in line with consensus, rising by 2.6% YoY in July. 
• The Cable will be impacted by the BoE rate cut expectation for the time being. 

The EUR/GBP cross trades with mild losses around 0.8560 during the early European session on Friday. Traders await the release of UK monthly employment data, which will be released next Tuesday. 

Data released by the German statistics office Destatis on Friday showed that the German Harmonized Index of Consumer Prices (HICP) rose 2.6% YoY in July. This figure was in line with the market expectation. On a monthly basis, the HICP inflation remains unchanged at 0.5% MoM versus 0.5% prior.

The European Central Bank (ECB) policymaker Olli Rehn said on Wednesday that the ECB 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. ECB President Christine Lagarde said during the coast conference the question of any move in September is wide open.

On the other hand, the Pound Sterling (GBP) will be influenced by the expectation of a rate cut by the Bank of England (BoE) amid the lack of top-tier economic data released. The BoE lowered its benchmark rate to 5.0% from a 16-year high of 5.25% last week. The UK central bank suggested that the central bank will use a cautious approach in its policy normalization process.