• EUR/GBP is auctioning in an 8-pip range as the focus is on monetary policy by the BOE.
• The BOE is likely to elevate its interest rates by 50 bps to 1.75%.
• Investors have ignored the downbeat Eurozone Retail Sales data.

The EUR/GBP pair is juggling in a narrow range of 0.8366-0.8374 in the Asian session. The cross is likely to remain on the sidelines as investors are awaiting the announcement of the interest rate policy by the Bank of England (BOE).

As per the market estimates, the BOE will announce a rate hike by 50 basis points (bps). BOE Governor Andrew Bailey will feature a rate hike by half of a percent, which will push the interest rates to 1.75%. It is worth noting that price pressures in the UK area have climbed to 9.4%. Also, the inflation rate has not shown any sign of exhaustion yet, which indicates that the new normal 50 bps rate hike is not sufficient to offset the accelerating inflationary pressures.

The downbeat economic data and political instability after the resignation of UK PM Boris Johnson have weakened the BOE in acting strongly on monetary policy. Lower Average Hourly Earnings are not providing comfort to rising employment generation and henceforth to the BOE as households are facing severe heat. Aggressive interest rate hikes by the BOE could hurt the job addition numbers due to restrictions on investments by corporate players.

Meanwhile, the shared currency bulls have ignored the vulnerable Retail Sales data. The economic data landed at -3.7%, lower than the expectations of -1.7% and the prior release of 0.4%. In times, when price pressures are sky-rocketing, the Retail Sales data should have reported an uptick, however, a slump in the same indicates that the overall demand is extremely poor.