The EUR/GBP cross has lost its recovery momentum, trading around 0.8445 during the early European session on Wednesday. The Pound Sterling (GBP) has edged higher following the release of UK inflation data. Market focus will soon shift to the Eurozone’s Harmonized Index of Consumer Prices (HICP) data later in the day.
Data from the Office for National Statistics revealed that the UK Consumer Price Index (CPI) increased by 2.2% year-on-year in August, matching both the previous reading and market expectations. Core CPI, excluding volatile food and energy prices, rose by 3.6% year-on-year in August, up from 3.3% in July and surpassing the anticipated 3.5%. This led to a slight uptick in GBP as traders reacted to the inflation figures.
Attention will now turn to the Bank of England’s (BoE) interest rate decision scheduled for Thursday. The BoE is expected to hold rates steady for now, with speculation about a more aggressive stance potentially beginning in November. The probability of a 25 basis point rate cut in September has increased but remains relatively low at around 35%, according to LSEG data.
On the Eurozone front, European Central Bank (ECB) Governing Council member Martins Kazaks indicated on Monday that while the ECB plans to ease monetary policy further, it will do so cautiously due to ongoing inflation risks. This less dovish stance from ECB officials may help mitigate the Euro’s losses against the GBP.
The upcoming Eurozone HICP inflation data is anticipated to provide insights into the region’s inflation trends and may influence the ECB’s policy decisions. The HICP is expected to show a 2.2% year-on-year increase for August, while the core HICP is forecasted to rise by 2.8% for the same period.
Related Topics:
