Euro Recovers Against Pound Amid German Inflation Surge and Middle East Tensions

The Euro has partially recovered against the British Pound on Wednesday following hot German inflation data. The EUR/GBP pair rose above 0.8540, but remains below last week's highs of 0.8580. Germany's Harmonized Index of Consumer Prices (HICP) accelerated to a 2.8% year-over-year rate in July from 2.4% in June.

The increase was driven by energy inflation, which jumped to 7.3% in the 12 months to July from 2.7% in June. The rising oil prices have fueled inflationary pressures across the board and added pressure on the Eurozone's Oil-importing economies.

Meanwhile, tensions in the Middle East have pushed oil prices higher, with Brent Oil appreciating to levels beyond $88.00, about 13% up from last week's highs. The UK calendar is void on Wednesday, but investors will remain focused on Thursday's second quarter's preliminary Gross Domestic Product (GDP) release for further guidance about the Bank of England's near-term monetary policy.