• EUR/GBP is struggling below 0.8525 as investors are eyeing the release of the Eurozone HICP.
• Eurozone HICP is seen at 7.7% against the prior print of 7.4%.
• The BOE is expected to announce a rate hike by 50 bps in its June monetary policy.

The EUR/GBP is displaying a lackluster performance in the early European session as investors are awaiting the release of the Europe Harmonized Index of Consumer Prices (HICP). On a broader note, the asset is consolidating in a 0.8511-0.8528 range after an upside move from May 27 low at 0.8481.

Investors should brace for higher Eurozone HICP numbers in relation to its estimates. As per the estimates, an annual inflation rate is seen at 7.7% against the prior print of 7.4%. One should attempt to consider HICP numbers country-wise in Europe as they are displaying a wider divergence in the estimated and printed figures. Spain’s HICP has landed at 8.5% against the forecast of 8.2% while Germany’s HICP has been recorded at 8.7%, much higher than the estimates of 8%.

Therefore, inflationary pressures from the eurozone are seen at elevated levels, which will definitely compel the European Central Bank (ECB) to feature a rate hike for the first time since the concept of helicopter money to tackle to Covid-19 related circumstances.

On the pound front, the inflation rate has climbed above 9%, which is sufficient to create havoc for the Bank of England (BOE). The troublesome activity of taming the soaring inflation for BOE policymakers may keep the currency in check. Odds are plenty which conveys that the market participants will listen to a rate hike of 50 basis points (bps) by the BOE.