ECB policymakers are hesitant to pursue a rate-cut path due to concerns that price pressures could reaccelerate.
Germany’s Producer Price Index fell by 0.8% YoY in July, following the previous 1.6% decrease.
Last week's economic reports support the case for the BoE to maintain the rate at 5.0% in September.
EUR/GBP retraces its recent gains, trading around 0.8520 during the early European hours on Tuesday. Investors anticipate that the European Central Bank (ECB) will gradually reduce interest rates. ECB policymakers have hesitated to commit to a specific rate-cut path due to concerns that price pressures could reaccelerate.
Germany’s Producer Price Index (PPI) declined by 0.8% year-over-year in July, in line with expectations, following the previous decline of 1.6%. Meanwhile, the monthly index showed a 0.2% increase, also as anticipated. Investors have shifted their focus on the Harmonized Index of Consumer Prices (HICP) data from the European Monetary Union (EMU) scheduled for release later in the day.
Last week's UK inflation and employment reports have strengthened the case for the Bank of England (BoE) to maintain the interest rate at 5.0% at its upcoming September meeting. Finance Minister Rachel Reeves emphasized that the latest data highlights the challenges facing the new government, reiterating her position that tough decisions will be needed to improve the country's economic fundamentals, according to Reuters.
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