Ahead of Germany's CPI Release, Will the Euro/Pound Stabilize Around 0.8560?

Ahead of the German CPI Release, Will the Euro/Pound Find Support Around 0.8560?

31.08.2026 New

On the 28th, the U.S. dollar rose following a speech by Fed Chair Warsh. Chair Warsh indicated that unless the Fed gains confidence that inflation is heading toward 2%, the Fed will need to take further action.The probability of a 25-basis-point rate hike at the September meeting rose from about 35% to 57.5%.The Dollar Index rose 0.59% to around 99.69, while the dollar/yen pair traded within a range of about 0.95 yen, between 159.26 and 160.21 yen, before closing near 160.07 yen.The 160.20 yen level is likely to act as resistance, while the 159.30 yen level is expected to serve as support. The key focus will be whether the pair can hold above the key 160.00 yen level.

Among European currencies, the euro fell against the pound amid a downward revision to France’s GDP and confirmation of accelerating CPI growth. France’s final GDP figure for the April–June quarter came in at 0.0% quarter-on-quarter, revised down from the preliminary estimate of 0.2%.Meanwhile, the preliminary August CPI reading came in at 2.4% year-over-year, marking an acceleration from the previous reading of 2.1%. The euro traded against the pound within a range of approximately 24 pips, between 0.8555 and 0.8579 pounds, and closed near 0.8559 pounds.The 0.8580-pound level is likely to act as resistance, while the 0.8550-pound level is likely to act as support. We will monitor whether the pair finds support in the 0.8550-pound range.

In today’s economic data, China’s August Manufacturing Purchasing Managers’ Index (PMI), released at 10:30, came in at 49.8—up from the previous reading of 49.2, but still below the 50-point threshold that marks the boundary between expansion and contraction.Japan’s July new housing starts, released at 2:00 p.m., rose 8.2% year-over-year, marking a slowdown from the previous reading of 18.6%. Later today, Turkey’s Q2 GDP will be released at 4:00 p.m., followed by Germany’s preliminary August CPI at 9:00 p.m.Germany’s CPI is expected to come in at 0.3% month-over-month and 3.0% year-over-year, compared to 0.8% and 2.8%, respectively, in the previous reading. We will be watching closely to see how improving business sentiment in China and price trends in Germany affect the direction of European currencies and the U.S. dollar.