The EUR/GBP pair has sensed some attraction near 0.8820 after a perpendicular sell-off on Thursday. The cross is showing signs of recovery as investors are shifting their focus toward the Eurozone Gross Domestic Product (GDP) and German Harmonized Index of Consumer Prices (HICP) data.

The release of the preliminary Eurozone GDP and German HICP carries significant importance as they will be the latest economic data before the interest rate decision by the European Central Bank (ECB), which will be announced next week.

As per the consensus, preliminary Eurozone GDP has grown by 0.2% in the first quarter vs. a stagnant performance. On an annual basis, preliminary GDP is seen expanding by 1.4% at a slower pace than the 1.8% recorded earlier. ECB policymakers are confident that Eurozone will dodge the recession amid solid consumer spending due to labor shortage.

Meanwhile, preliminary monthly German inflation is seen accelerated by 0.8% vs. the 1.1% pace recorded in the prior month. This is going to provide some relief to ECB policymakers. However, more focus will be on core inflation figures as ECB policymakers believe that the core Consumer Price Index (CPI) has remained extremely stubborn.

Analysts at Danske Bank point see a 50bp rate hike more likely by ECB President Christine Lagarde, with no specific forward guidance but repeating a data-dependent approach to future policy decisions.

On the Pound Sterling front, the absence of inflation softening signals is strengthening the case for more rate hikes from the Bank of England (BoE). The street is anticipating a consecutive 25 bp rate hike from BoE Governor Andrew Bailey to 4.50% for its May monetary policy meeting.