EUR/GBP remains below 0.8450 following HCOB PMI data from Eurozone

• EUR/GBP pares its intraday gains after the downbeat HCOB PMI data from Eurozone and Germany.
• Eurozone Services PMI decreased to 52.9 in August, from 53.3 in the previous month.
• The Pound Sterling may appreciate it as the BoE is expected to deliver no rate cut in September.

EUR/GBP trims its intraday gains following the release of HCOB Purchasing Managers Index (PMI) data from the Eurozone and Germany, trading around 0.8430 during Wednesday’s European session. The Eurozone Services PMI decreased to 52.9 in August, from 53.3 in the previous month. Meanwhile, the Composite PMI dropped to 51.0, missing expectations and falling below the previous reading of 51.2, which was expected to remain unchanged.

In Germany, the HCOB Services PMI declined to 51.2 in August, slightly below market expectations of no change from the previous 51.4 reading. Meanwhile, the Composite PMI also fell to 48.4, just under the anticipated and prior reading of 48.5.

However, the upside potential for the EUR/GBP cross may be limited, as the Euro may face challenges amid strong speculation that the European Central Bank (ECB) will cut interest rates in September. This would mark the second interest rate cut by the ECB since it began shifting toward policy normalization in June. Policymakers remain confident that inflation will gradually return to the bank’s 2% target by 2025.

The EUR/GBP cross may struggle as traders anticipate no rate cut by the Bank of England (BoE) in the September meeting. However, traders expect a 25 basis points (bps) interest rate cut in the November meeting.

Growing concerns about the global economy have intensified after weak PMI data from the world’s two largest economies. Traders will be closely watching the PMI data from the United Kingdom (UK) later in the day.