• EUR/GBP bounced from near-term lows to cross 0.8450.
• BoE keeps rates on hold, cites still-tight labor market and tricky inflation.
• Friday to wrap up the trading week with UK Retail Sales, PMIs in EU and UK.

EUR/GBP found some room on the high side on Thursday after the Bank of England kept rates on hold at 5.25%. Mid-tier EU data did little to spark much movement in either direction, though Euro traders will note a further softening in the German Producer Price Index (PPI) in May.

Germany’s PPI slipped to 0.0% MoM in May, down from the previous 0.2% and flubbing the forecast uptick to 0.3%. YoY PPI figures also missed the mark, declining to -2.2% for the year ended in May. The annualized figure rebounded from the previous -3.3%, but still failed to grab the forecast recovery to -2.0%.

The BoE held rates in place in June as was broadly expected, but a focus on recent services inflation coupled with an ambiguous goal to keep inflation “sustainably” at 2% has left the Sterling in the lurch. The BoE went on to note a willingness to keep policy restrictive for as long as needed and highlighted that the UK labor market, while looser than previous, still remains tight in comparison to historical figures. The Sterling lost ground against the Euro, pulling EUR/GBP back up from an intraday low of 0.8435 to retest 0.8460