• EUR/GBP has scaled above 0.8500 as investors are underpinning shared currency ahead of ECB.
• The ECB may step up its interest rates for the first time in 11 years.
• UK’s overall inflation has climbed to 9.4% while the core CPI slips by 10 bps to 5.8%.

The EUR/GBP pair has rebounded gradually after testing the prior inventory distribution area, which is placed in a narrow range of 0.8475-0.8495 with lower selling pressure. The cross is attempting to establish above 0.8500 as investors are underpinning the shared currency bulls on expectations of a rate hike announcement by the European Central Bank (ECB).

ECB President Christine Lagarde is expected to step up its interest rate for the first time in 11 years.  As the price pressures have gone beyond the tolerance power of households in Europe and the Asset Purchase Program (APP) has been concluded, the ECB needs to feature an interest rate hike. No doubt, the extent of the rate hike could be lower initially as the ECB may prefer to test the waters and later on hike rates by a higher extent.

Meanwhile, the situation of gas supply from Nord Stream 1 to Europe has turned obscure after comments from Russian President Vladimir Putin said that they are yet to see in which condition the equipment for Nord Stream 1 will be after returning from maintenance.

On the pound front, price pressures have remained on the higher side led by volatile oil and food prices. However, the core Consumer Price Index (CPI) has shown some exhaustion. The overall inflation rate landed at 9.4%, higher than the expectations of 9.3% and the prior release of 9.1%. While the core CPI remained in line with the estimates at 5.8% and lower than the former print of 5.9%.