• EUR/GBP closed above 0.8600 and saw 0.20% gains.
• A Reuters report indicated that the ECB will hike on Thursday on higher-than-expected inflation forecasts.

On Wednesday, the EUR/GBP closed above 0.8600, and the EUR gained ground over the GBP as investors are preparing an announcement of a 25 basis point (bps) hike by the European Central Bank (ECB) on Thursday. 

In line with that, Reuters reported that the European Central Bank (ECB) foresees eurozone inflation remaining above 3% next year, exceeding the previous 2% projections, which would justify a tenth consecutive interest rate hike at its upcoming meeting on Thursday. In the meantime, market expectations are divided between the bank maintaining current rates and a 25 basis point increase due to concerns about high inflation and looming recession fears.

Despite this projection strengthening the case for a hike, analysts still believe that the decision will be a close call.