EUR/GBP Capped Near 0.8600 as ECB Rate Hike Looms

The EUR/GBP exchange rate is trading in a narrow range on Wednesday, struggling to extend Tuesday's rebound.

The 100-period Simple Moving Average (SMA) at 0.8599 limits the immediate upside, but momentum indicators remain modestly bullish.

Markets have fully priced in a 25-basis-point interest rate hike from the European Central Bank (ECB) on Thursday, which would be its second increase this year, after higher oil prices intensified inflation pressures across the Eurozone.

This expectation supports the Euro (EUR), while the British Pound (GBP) faces little support as the Bank of England (BoE) is expected to leave borrowing costs unchanged when it meets on September 17.