EUR/GBP marches to test two-week high at 0.8600, eurozone Retail Sales eyed

• EUR/GBP is advancing to reclaim 0.8600 as the ECB may adopt a hawkish stance post the pandemic.
• An outperformance is expected from the eurozone Retail Sales data.
• Higher price pressures in the UK are depreciating the wallets of the households in the UK.

The EUR/GBP pair is auctioning around 0.8530 after giving an upside break of the consolidation formed in a range of 0.8481-0.8530. The cross is likely to perform lackluster as investors are awaiting the release of the eurozone Retail Sales, which are due on Friday.

A preliminary estimate for the annual and monthly Retail Sales is 5.4% and 0.3% respectively.  The economic data is expected to display an outperformance as the prior prints were 0.8% on annual basis and -0.3% on monthly basis. And, preliminary estimates for the annual and monthly Retail Sales are 5.4% and 0.3% respectively.

Investors are expected to favor the shared currency bulls as the odds of ending the lower rates cycle by the European Central Bank (ECB) are advancing higher. ECB policymakers are advocating for a rate hike announcement to corner the soaring inflation. It is worth noting that, unlike the other giant central banks, the ECB has yet not elevated its interest rates. The majority of the central banks have come halfway to their neutral rates and the ECB is still stuck to an ultra-loose monetary policy.

On the pound front, the Bank of England (BOE) looks bound to feature a 50 basis point (bps) interest rate hike in its June monetary policy meeting. The recorded annual inflation rate in the UK is above 9%, which is sufficient to trigger recession fears and eat income of the households.