• EUR/GBP has printed a fresh day's high at 0.8836 amid hawkish ECB bets.
• Eurozone’s inflation is extremely persistent amid labor shortage so favors a big rate hike ahead.
• March’s UK inflation data holds significant importance as it will be the last before BoE’s May policy meeting.

The EUR/GBP pair has printed a fresh day high after climbing above the critical resistance of 0.8830 in the Tokyo session. The cross is eyeing more upside as the street is anticipating a continuation of the rate hike spell by the European Central Bank (ECB).

Eurozone’s inflation is extremely persistent amid the labor shortage, which is resulting in higher employment bills from firms. Apart from that, supply chain disruptions after the Russia-Ukraine war have not cleared, which have been fueling inflationary pressures for a long period.

European Central Bank (ECB) President Christine Lagarde is expected to face the issue of deciding the pace of rate hikes as the continuation of bigger rate hikes could trigger recession fears. Bloomberg reported that a majority is expecting the European Central Bank (ECB) to hike rates by 25 basis points (bps) at its May, June, and July policy meetings before pausing its tightening cycle, after a survey from economists. “That would take the deposit rate to 3.75%, where it would stay through the rest of the year.”

On the Pound Sterling front, higher Average Earnings data cemented the need for further rate hikes from the Bank of England (BoE). Three month Labor cost index (excluding bonuses) has landed higher at 6.6% than the consensus of 6.2% but in line with the prior release. Higher earnings are expected to keep inflationary pressures elevated, which will force BoE Governor Andrew Bailey to raise rates further.

Further, UK’s Consumer Price Index (CPI) data will be keenly watched. As per the consensus, monthly UK inflation has accelerated by 0.5% against a 1.1% elevation recorded in February. Annual CPI is expected to soften to 9.85 from the former release of 10.4%. Core CPI that excludes oil and food prices is expected to decelerate to 6.0% from the former release of 6.2%. March’s inflation data holds significant importance as it will be the last before May’s monetary policy meeting.