EUR/GBP holds positive ground above the 0.8540 mark, investors await German GDP, ECB’s Lagarde speech

• EUR/GBP holds positive ground near 0.8546 following the weaker-than-expected PMI data.
• The S&P Global Composite PMI for August came in at 47.9, below the expectation of 50.3.
• Investors await the German Gross Domestic Product Q2, ECB President Christine Lagarde's speech.

The EUR/GBP cross gains traction for the second consecutive day during the early Asian session on Thursday. The cross currently trades near 0.8546, up 0.12% on the day. Market participants will digest the economic data ahead of the German Gross Domestic Product Q2 and the Europen Central Bank (ECB) President Christine Lagarde's speech on Friday.

The first reading of the Eurozone Composite PM for August came in at 47.0, worse than the expectation of 48.5. In the same period, the Manufacturing PMI improved to 43.7, better than expectations of 42.6 while Services PMI fell to 48.3, below the estimation of 50.5. The reading below the 50.0 threshold indicates the contracting territory.

However, the bloc's service sector experienced its first decline in activity this year. The market anticipated that the ECB would pause the interest rate in its September meeting, but open the door for additional rate hikes by year-end.

On the other side, the Pound Sterling was weakened following the UK economic data. The S&P Global Composite PMI for August came in at 47.9, below the expectation of 50.3. This is the first time since January that the figure stands below 50. The Bank of England (BoE) has hiked interest rates 14 times since December 2021. However, the fear that aggressive tightening monetary policy will impact the UK economy, market players are now forecasting another rate hike to 5.5% in the September meeting.

Market players await the German Gross Domestic Product Q2 due on Friday. The quarterly figure is expected to remain the same at 0% while the annual figure is expected to stay at -0.2%. Later in the day, ECB President Christine Lagarde's speech on Friday will be the key highlight.