Euro Strength Ahead: EUR/GBP Hits Two-Week High on UK Services Inflation Slowdown

The EUR/GBP exchange rate reached a two-week high around 0.8570 on Wednesday, as the euro firmed while sterling softened.

In the UK, July's headline Consumer Price Index (CPI) rose to 2.9% year-on-year, but core services inflation eased to 3.4%, which tempered the pound's reaction.

The euro area's final reading kept July's headline inflation at 2.9%, unchanged from June and above the European Central Bank's target rate.

Global interest rates remain a headwind, with long-dated yields hitting multi-year highs in Germany and the UK, while US Treasury yields edged lower ahead of the Federal Reserve's upcoming FOMC Minutes.