EUR/GBP Hits Two-Week High as Euro Gains Against Weaker Pound

The EUR/GBP currency pair rose to a two-week high on Wednesday, reaching 0.8570 as the Euro gained strength against a softer Pound. The advance came after inflation data from the UK and Eurozone was released.

UK headline CPI increased 2.9% year-on-year in July, matching expectations, while core CPI remained at 2.6%, slightly above forecasts. However, services inflation, an important measure for the Bank of England, eased to 3.4% from 3.6%.

The slowdown in UK services inflation reduced expectations for aggressive Bank of England tightening and limited Sterling's reaction to the inflation report. Meanwhile, final Eurozone figures confirmed headline inflation at 2.9% in July, unchanged from the previous month and still above the European Central Bank's 2% target.