EUR/GBP consolidates in a narrow range around 0.8620, investors await UK GDP

• EUR/GBP oscillates around the 0.8604–24 region in a narrow trading band.
• The German Harmonized Index of Consumer Prices (HICP) came in at 6.5%, as expected.
• The Bank of England (BoE) policymaker said interest rates were expected to remain high for a longer period.

The EUR/GBP pair oscillates in a narrow range around 0.8620 heading into the early European session on Tuesday. Market players await the UK Gross Domestic Product (GDP) Q2 for fresh impetus. The growth rate is expected to grow by 0.2% on a yearly basis.

The latest data from Destatis showed on Tuesday that the German Harmonized Index of Consumer Price (HICP) came in at 6.5%, matching the market expectations. Earlier this week, the Eurozone Sentix Investor Confidence improved from -22.5 in July to -18.9 in August, versus the market consensus of -23.4.

Sentix Managing Director Patrick Hussy said that the Eurozone economy is still in recession. As a result, there can be no delight in this development. Nevertheless, the European Central Bank's (ECB) peak rate speculations were sparked by the global rating agency Fitch Ratings, which impacted the Euro against its rivals.

On the other hand, the Bank of England (BoE) chief economist, Huw Pill, stated on Friday that interest rates were expected to remain high for a longer period. He added that the central bank will be more data-dependent, and policymakers will respond as the economy and the data evolve.

It's worth noting that the Bank of England (BoE) raised interest rates by 25 basis points (bps) to a 15-year high of 5.25% from 5% in its August policy meeting on Thursday. Markets anticipated that the BoE would likely hike two additional rates by the end of the year as inflation remains high. However, the aggressive tightening policy by the BoE fuels concern about the negative impact on the UK economy and exerts pressure on the Pound Sterling.

Looking ahead, market participants will closely watch the UK Q2 Gross Domestic Product (GDP) on Friday. The data could significantly impact the US Dollar and give a clear direction to the EUR/GBP cross.