EUR/GBP sees upside above 0.8440 despite unchanged consensus for German HICP

• EUR/GBP is eyeing an establishment above 0.8440 ahead of German inflation.
• As per the estimates, the UK economy shrunk by 0.2% in July.
• The odds of a rate hike by the ECB will remain elevated.

The EUR/GBP pair is continuously facing barricades around 0.8440 for the last week. A stretched consolidation in a 0.8401-0.8453 range indicates that the market participants are awaiting a potential trigger for further guidance. This week, the German Harmonized Index of Consumer Prices (HICP) will be a major driver for the cross.

Considering the street expectations, Germany's HICP is likely to remain unchanged at 8.5%, similar to its prior close on an annual basis. Also, the monthly inflation data is seen unchanged at 0.8%. Investors should be aware of the fact that Germany is a core member of the European Union (EU) and its inflation data carries a significant impact on the shared currency bulls.

There is no denying the fact that the Germany HICP is displaying some peak signals, however, this doesn’t warrant that the European Central Bank (ECB) won’t go for a rate hike announcement or sound less hawkish. The ECB remained slowest in elevating interest rates among its Western peers due to regional imbalance after Russia’s invasion of Ukraine. Therefore, the odds of a rate hike are sky-rocketing as the inflation rate is beyond the desired rate.

On the pound front, lower consensus for the Gross Domestic Product (GDP) data has started displaying its consequences. A preliminary estimate for the UK GDP is 2.8% vs. 8.7% the former release on an annual basis. While the quarterly data is expected to report a shrink in economic activities by 0.2% against the expansion of 0.8%.