Forex
GBP Gains Strength Against EUR Amid UK Inflation Rise
The British Pound (GBP) has attracted some buyers against the Euro (EUR) following the release of UK inflation data. The UK Consumer Price Index (CPI) inflation jumped to 2.9% YoY in July, matching market expectations. This figure is the highest rate for four months and was driven by a 'sharp increase' in gas prices after the household energy price cap rose.
Philip Lane, ECB chief economist, stated that Eurozone inflation at 3% remains too high despite appearing modest compared to previous levels. Markets are now pricing in a continuation of the ECB hiking cycle, with a 90-94% chance of a 25 basis points hike to 2.50% at the September policy meeting.
The EUR/GBP cross pared gains around 0.8555 during early European trading hours on Wednesday. The pair's technical analysis shows it has a mildly bearish bias, with spot holding beneath the 20-day simple moving average of the Bollinger Bands and well below the 100-day simple moving average.
City economists project one Bank of England (BoE) rate hike by the end of the year, which would lift the Bank rate from 3.75% to 4.0%. However, strategists at Scotiabank note that weaker UK labour figures have done little to shift the policy outlook, with market pricing for one more hike before year-end remaining unchanged.
Philip Lane, ECB chief economist, stated that Eurozone inflation at 3% remains too high despite appearing modest compared to previous levels. Markets are now pricing in a continuation of the ECB hiking cycle, with a 90-94% chance of a 25 basis points hike to 2.50% at the September policy meeting.
The EUR/GBP cross pared gains around 0.8555 during early European trading hours on Wednesday. The pair's technical analysis shows it has a mildly bearish bias, with spot holding beneath the 20-day simple moving average of the Bollinger Bands and well below the 100-day simple moving average.
City economists project one Bank of England (BoE) rate hike by the end of the year, which would lift the Bank rate from 3.75% to 4.0%. However, strategists at Scotiabank note that weaker UK labour figures have done little to shift the policy outlook, with market pricing for one more hike before year-end remaining unchanged.