After rebounding from 0.8600 prior to ECB Lagarde's address, the EUR/GBP pair extends its recovery

During the Asian session, the EUR/GBP pair has strengthened its rebound to approximately 0.8615. The cross rallied well after touching Wednesday's low at 0.8600 as investors shifted their attention to Christine Lagarde's address for the European Central Bank (ECB).

The ECB President's statement will offer new momentum for the anticipated monetary policy moves at the December monetary policy meeting. Although ECB policymakers believe that the central bank has exerted a great deal of pressure on interest rates and that a neutral rate is close at hand, a December rate hike is more likely due to the Eurozone's persistent inflationary pressures.

A poll done by the ECB on consumer inflation predictions for the next 12 months indicated that median inflation estimates had increased from 5.0% to 5.4%. While inflation projections over the next three years remain steady at 3%. Therefore, markets should prepare for a hawkish ECB President statement on interest rate policy.

This week, monthly Retail Sales figures decreased by 1.8%, when analysts had predicted a contraction of 1.7%. And, yearly Retail Sales decreased by 2.7% compared to the consensus estimate of a 2.6% decline. In the absence of other factors, a drop in consumer expenditure suggests an impending deceleration in inflation.

The rising food supply issue in the United Kingdom is driving already robust food inflation, causing inflation expectations to surge. Rising input costs and labor shortages are causing a food supply shortage, which is likely to accelerate food inflation from its current rate of 12.4%. This could deepen the slump in the British economy and have an effect on the pound.