EUR/GBP rises to near 0.8350 after weak UK CPI data

EUR/GBP appreciates following the data release of the UK Consumer Price Index on Wednesday.
The UK CPI increased by 2.8% year-over-year, falling short of the expected 2.9%.
The Euro faced challenges amid expectations that the European Central Bank could reduce interest rates again in April.

Akhtar Faruqui FXStreet

The EUR/GBP pair regained ground on Wednesday following the release of downbeat Consumer Price Index (CPI) data from the United Kingdom (UK). The pair is currently trading around 0.8340 during early European market hours.

In February, the UK’s CPI rose 2.8% year-over-year, slowing from January’s 3.0% increase and missing market expectations of 2.9%. Despite the decline, inflation remains above the Bank of England’s (BoE) 2% target. Meanwhile, core CPI, which excludes food and energy prices, increased by 3.5% YoY, easing from January’s 3.7% and coming in below the forecasted 3.6%.

The Pound Sterling (GBP) faced additional pressure after the BoE left interest rates unchanged at 4.5% last week. Eight of the nine Monetary Policy Committee (MPC) members voted to maintain current borrowing costs, while policymaker Swati Dhingra was the sole supporter of a 25-basis-point (bps) rate cut. Economists had anticipated that two officials might favor a reduction.

However, EUR/GBP’s gains could be capped as the Euro remains under pressure amid expectations that the European Central Bank (ECB) could lower interest rates again in April. ECB Governing Council member François Villeroy de Galhau stated on Tuesday that further rate cuts are possible and that the 2.5% deposit rate could drop to 2% by the summer’s end.

Meanwhile, ECB President Christine Lagarde told the European Parliament last week that the inflationary impact of trade tensions driven by US President Donald Trump would be temporary, as weaker economic activity would eventually ease inflationary pressures.

Economic Indicator

Consumer Price Index (YoY)

The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

BRANDED CONTENT

Finding the right broker for your trading strategy is essential, especially when specific features make all the difference. Explore our selection of top brokers, each offering unique advantages to match your needs.

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

AUD/USD regains mild traction, falters near 0.7150

AUD/USD gathers some steam and manages to flirt with the 0.7150 level on Thursday. However, the pair has retraced some of Wednesday’s significant pullback due to renewed selling pressure on the Greenback and a slight improvement in risk sentiment following hopes of a deal in the Middle East. Wrapping up the Australian docket, the RBA’s Hauser will speak early on Friday.

USD/JPY trades below 160.00 intervention threshold; bullish bias intact

The USD/JPY pair attracts some sellers during the Asian session amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, the Israel-Lebanon truce prompts some profit-taking around the US Dollar and exerts downward pressure on the currency pair.

Gold puts its 200-day SMA to the test near $4,420

Gold keeps the bullish stance in place in the latter part of Thursday’s session, although a convincing break above the key $4,500 mark per troy ounce still remains elusive. The precious metal’s advance comes amid the resurgence of some selling interest around the Greenback, improving risk sentiment, and declining US Treasury yields across the board.

XRP plummets as ETF outflows, geopolitical tensions reinforce bearish outlook

Ripple (XRP) edges lower, trading around $1.15 at the time of writing on Thursday, its lowest price since February 6. The cross-border money remittance token is extending the sell-off for the fifth consecutive day, reflecting persistent headwinds from ongoing geopolitical tensions and investor uncertainty.

Nonfarm payrolls: Testing the limits of Fed policy patience

The upcoming nonfarm payrolls report for May will provide the final update on the US labor market before Kevin Warsh attends his first policy meeting as the new Fed Chair later this month.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.