• EUR/GBP receives upward support ahead of German economic data.
• The Euro faced challenges on downbeat PMI data from the Eurozone.
• UK PMI data indicated an uptick in growth at the end of the year.

EUR/GBP trades higher near 0.8600 during the early European hours on Monday ahead of German IFO data. The EUR/GBP cross snaps recent losses registered in the previous two sessions. The Euro (EUR) faced downward pressure on weaker preliminary HCOB Purchasing Managers Index (PMI) data from the Eurozone.

The eurozone business activity unexpectedly declined in December, suggesting a challenging economic environment in the bloc. The HCOB Composite PMI fell to 47.0, down from the previous reading of 47.6, and below the anticipated improvement to 48.0. Manufacturing PMI remained steady at 44.2, against the expected reading of 44.6, while Services PMI decreased to 48.1 instead of the expected increase to 49.0.

On the flip side, the Pound Sterling (GBP) is supported by the Bank of England's (BoE) hawkish stance, emphasizing that monetary policy is likely to remain restrictive for an extended period due to elevated indicators of inflation in the United Kingdom (UK).

The preliminary S&P Global/CIPS PMI data from the UK suggests an uptick in growth at the end of 2023. The Composite PMI for December improved to 51.7 from the previous 50.7, and Services PMI rose to 52.7 from the earlier figure of 50.9. However, Manufacturing PMI reduced to 46.4 from 47.2 previously.

Investors await UK Consumer Price Index (CPI) data to gain fresh impetus on consumer price inflation in the country. The monthly CPI for November is expected to rise by 0.2%. While CPI year-on-year is predicted to ease at 4.4% against the previous month’s rate of 4.6%.