EUR/GBP gains momentum above the 0.8540 area ahead of EU Current Account

• EUR/GBP gains ground around 0.8543, up 0.02% for the day.
• The German Buba Monthly Report revealed that inflation could stay above the central bank's target for longer.
• Traders expect the Bank of England (BoE) to raise a 25 basis point (bps) rate to 5.50% in the September meeting.
• The Eurozone/UK PMI data, ECB's President Lagarde speech will be in focus.

The EUR/GBP cross holds positive ground above 0.8540 in the Asian session on Tuesday. The cross trades in positive territory for the third day in a row. Market participants await the inflation data from both the UK and the Eurozone for fresh impetus ahead of the European Central Bank (ECB) President Lagarde's speech on Friday.

On Monday, the annual German Producer Price Index (PPI) for July fell to -6%, compared to a 0.1% increase and a market expectation of -5.1%. The monthly PPI figure decreased to -1.1%, below the market consensus of -0.2% and the prior reading of -0.3%. Additionally, the German Buba Monthly Report revealed that inflation could stay above the central bank's target for longer. Investors placed hawkish wagers on the European Central Bank (ECB) due to inflation risks on the upside. This, in turn, lifts the Euro against its rivals.

On the other hand, traders expect the Bank of England (BoE) to tighten monetary policy further, pricing in a 25 basis point (bps) rate hike to 5.50% in its September meeting. The fear of an aggressive rate hike by the BoE might exert pressure on the Pound Sterling as investors worry that it might impact negatively the UK economy after 14 consecutive rate hikes. However, the upbeat UK GDP and CPI data increase the likelihood of further BoE policy tightening.

Later this week, the Eurozone Current Account, S&P Purchasing Managers' Index (PMI), and German Gross Domestic Product (GDP) Q2 will be released later this week. The UK docket will feature S&P Global PMIs and the GfK Consumer Confidence. The European Central Bank (ECB) President Christine Lagarde will likely provide additional guidance on their monetary policies. This event will be critical for determining a clear movement for the EUR/GBP cross