EUR/GBP gathers strength for further upside above 0.8550 ahead of BoE’s Bailey speech

• EUR/GBP is making efforts for a range extension towards the north ahead of Andrew Bailey’s speech.
• An economic indicator that could create more troubles for BoE policymakers is the labor cost data.
• ECB Centeno cited that Eurozone’s inflation could come under 3% by the end of 2023.

The EUR/GBP pair is oscillating in a narrow range around 0.8550 in the London session. The asset is demonstrating a back-and-forth action after a solid recovery as investors are awaiting the speech from Bank of England (BoE) Governor Andrew Bailey for further guidance.

Inflation in the United Kingdom is not showing signs of deceleration despite that BoE and UK diplomats have extended the scope of an inflation-control toolkit to coercion. Therefore, the speech from Andrew Bailey will be keenly watched to get cues about inflation and interest rate guidance.

The burden of red-hot inflation on households is elevating as household demand has reported a steepest fall in the past 14 years. Apart from Andrew Bailey’s speech, investors will keep an eye on the labor market data.

As per the preliminary estimates, Claimant Count Change is expected to show an increase of 20.5K in June vs. a decline of 13.6K reported last month. The Unemployment Rate is seen unchanged at 3.8% and Three-month Average Earnings Index is expected to increase to 6.8% against the former release of 6.5%.

An economic indicator that could create more troubles for BoE policymakers is the labor cost data, which is expected to increase further and make the inflation situation more worsen.

On the Eurozone front, Sentix Investor Confidence has turned vulnerable to -22 vs. the former release of -17. This indicates a significant loss in the confidence of investors toward current and forward economic conditions. This could be the outcome of higher interest rates from the European Central Bank (ECB), which are expected to tighten further as the victory has not been announced over inflation yet.

On Friday, ECB Governing Council member and Bank of Portugal Governor, Mario Centeno cited that Eurozone’s inflation could come under 3% by the end of 2023.” He further added inflation is coming down faster while the Eurozone labor market is the strongest it has ever been.