EUR/GBP accelerates towards 0.8880, investors await UK labor data for fresh cues

• EUR/GBP is marching towards 0.8880 amid soaring hawkish ECB bets.
• Bloomberg’s poll states that the ECB will achieve an interest rate peak at 3.25% by May.
• The Pound Sterling will dance to the tunes of UK employment data.

The EUR/GBP pair is aiming to recapture the crucial resistance of 0.8880 in the Asian session. The cross has remained sideways in a 0.8860-0.8875 range as investors are awaiting the release of the United Kingdom employment data for fresh impetus.

The asset recovered firmly on Monday from the critical support of 0.8850 after a Bloomberg poll on interest rate projections for the European Central Bank (ECB) indicated that the central bank will reach the terminal rate by May. According to the poll from Bloomberg, ECB President Christine Lagarde is expected to push interest rates to 3.25%. The central bank will announce 50 basis points (bps) interest rate hike in February and March and a 25 bps rate hike in May that will support the ECB in achieving a terminal rate from the current rate of 2%.

Also, ECB Governing Council member Olli Rehn cited on Monday, “I see significant rate hikes at the next meetings,”

On the United Kingdom front, the speech from Bank of England (BoE) Governor Andrew Bailey in which he assures inflation softening failed to provide strength to the Pound Sterling. However, BoE Governor is worried about rising wage growth, which could be a hurdle in decelerating inflation. He added that the major risk to BoE's central case for inflation coming down is the UK labor shortage.

On Tuesday, the UK labor data will hog the limelight. As per the projections, the Unemployment Rate for three months (Nov) is expected to remain steady at 3.7%. While the Average Earnings excluding bonus is expected to rise to 6.3% from the prior release of 6.1%. This might escalate the upside risk for inflation ahead.