• EUR/GBP hits session lows a few pips above 0.8550, extending its reversal from Thursday's highs at 0.8585.
• Eurozone preliminary data showed that consumer prices ticked up to 2.9% YoY in July from 2.8% in June.
• The Pound is drawing support from a mild hawkish repricing after Thursday's BoE's monetary policy meeting.

The Euro (EUR) edges lower against the British Pound (GBP) on Friday, hitting session lows at 0.8554 following the Eurozone’s preliminary inflation figures from July. The pair has turned negative in the daily chart, but remains on track for a 0.2% weekly appreciation so far.

Data released on Friday showed that the Eurozone’s preliminary Harmonised Index of Consumer Prices (HICP) accelerated to a 2.9% year-on-year growth in July, from June’s 2.8% growth, in line with the market’s expectations. Monthly inflation rose 0.2%, reversing the 0.1% contraction seen in June. Beyond that, the core HICP, ticked up to 2.5% against market expectations of a steady 2.4% growth.

Previously, data from France showed that yearly inflation accelerated to 2.4% in July from 2% in June, well above the 2.1% increase forecast by market analysts and from June's 2.0% reading. On the negative side, the German Unemployment Rate increased against expectations to 6.4% in June from 6.3% in May, as the number of jobless workers increased to 6K after a 1K drop in the previous month.

BoE split gives a fresh boost to the Pound

The Pound, on the other hand, is drawing some support from Thursday’s Bank of England (BoE) monetary policy decisions. The bank left interest rates on hold, as widely expected on Thursday, but the three hawkish dissenters, and Governor Bailey opennness to tighten monetary policy if the Middle East conflict pushes Oil prices beyond $100 fuelled some hopes of a rate hike later this year.

Analysts at TD Securities, however, warn that, “other than the vote split, it would appear to us the rest of the committee is still very comfortable keeping rates on hold, given the lack of clear second-round effects observed in inflation data.” In that context, TD argues that “the knee-jerk GBP rally should be faded vs the EUR and USD,” warning that “further paring back of September BoE rate hike pricing could weigh on GBP.”